ECB Hike in September Looks More Likely Amid Heightened Inflation Risks
Dow Jones
Jul 31
1240 GMT - Eurozone inflation remains above target with significant risks ahead, says Iain Simmons at Oxford Economics. Headline inflation rose 0.1 percentage points to 2.9% in July amid high energy prices due to escalation in the Middle East. Since the ceasefire in Iran collapsed, the risk of broader inflation effects has risen substantially, strengthening the case for a rate hike in September, he says. "Inflation remains above target and yesterday's upside GDP surprise suggests that the eurozone economy may be more able to absorb tighter policy more easily than previously thought." Still, the inflation data show a relatively muted reaction to the Middle East escalation, and second-round wage effects are likely to be limited later this year, Simmons says.
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