Euro area inflation cooled ahead of MoU, Frederik Ducrozet notes

Euro area inflation cooled ahead of MoU, Frederik Ducrozet notes
Euro area inflation eased before MoU

Frederik Ducrozet highlights that price pressures in the euro area were already beginning to ease before the recent ceasefire. According to Ducrozet, most responses in the June flash PMI were collected before the signing of the memorandum of understanding between the U.S. and Iran on 17 June.

He suggests there is now even less reason to pursue further monetary tightening.

The European Central Bank raised rates for the first time since September 2023, with Frederik Ducrozet noting higher inflation forecasts and a weaker GDP outlook for 2026 in a recent report (ECB rate hike). Ducrozet had also cited a rise in services inflation as a concern ahead of the central bank’s most recent policy move (services inflation report). These developments have shaped ECB discussions on policy direction through mid-year.

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