Eurozone Inflation Steadies in June
THE TAKEAWAY: Eurozone inflation rate remains at 2.4% for June -> Lower inflation allows for ECB action -> Euro trading higher following EU summit
The Eurozone annual inflation rate was estimated at 2.4% in June, unchanged from May’s inflation rate and falling in line with analysts’ expectations. The inflation estimate was put together by Eurostat and is based on price information provided by Eurozone members. The final Consumer Price Index for June will be released in July.
The fall to a 2.4% inflation rate in May set a new yearly low, and lower inflation combined with a struggling economy usually allows for monetary expansion or interest rate cuts. European Central Bank President Mario Draghi said on June 6 that a few officials had called for an interest rate cut, adding to speculation that the ECB will take action during their July meeting.
The Euro, as well as other risk-correlated assets, rallied earlier today on the news of resolutions on a number of issues during the 2-day EU summit meeting that started on Thursday. The news of the steady inflation did not affect Euro trading, as EUR/USD continued to consolidate around 1.2570, following the initial spike towards 1.2600 following the summit news.
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