Iran-Israel Clash Afte... GOP trades tax for cuts Trump Megabill Trigger... Gaza strikes, ceasefir... Markets Rally Despite ... Europe’s record heatwa... ECB signals cautious easing Thai PM Suspended Over... In other news
01-07-2025
About this site | Sitemap

ECB Nears Target, Signals Cautious Easing Path

Date: 01-07-2025
Sources: cnbc.com: 3 | nytimes.com: 1
Image for cluster 4
Image Prompt:

A modern financial scene set in a sleek European cityscape at dawn: the European Central Bank building prominently in the background with a subtle “2%” glowing near its façade. In the foreground, a balanced scale holds a euro coin on one side and an oil barrel on the other, symbolizing inflation and energy risks. A digital ticker shows “Core 2.3%, Services 3.3%,” and a muted market screen displays “Hold July, Possible September Cut.” Traders and officials in suits watch cautiously, charts showing gentle downward inflation lines and steady interest rates. Global flags and a distant conference stage hint at a central bankers’ forum, while soft arrows

Summary

Euro zone inflation has returned to around the European Central Bank’s 2% target, reinforcing signals from ECB officials that the tightening cycle addressing the 2021–2022 price surge is effectively over. Core inflation is easing but services remain sticky, leaving policymakers data‑dependent and wary of overreacting to minor fluctuations. Markets now expect the ECB to hold rates in July and consider a small cut in September, with risks from energy prices, exchange-rate moves, and trade tensions. European equities opened cautiously as investors tracked inflation prints, labor data, and a looming U.S. tariff deadline. At the ECB’s Sintra forum, global central bankers, including Fed Chair Jerome Powell, emphasized patience and meeting-by-meeting decisions amid geopolitical uncertainty.

Key Points

  • Euro zone headline inflation hit 2% in June, with core at 2.3% and services at 3.3%.
  • ECB officials say the tightening cycle is done; policy will remain data-dependent with a bias toward caution.
  • Markets expect no July move and a potential 25 bps cut in September as growth risks tilt downside.
  • Risks include sticky services inflation, volatile energy and oil prices, exchange-rate shifts, and potential U.S. tariffs.
  • Global central banks stress patience; the Fed signals cuts likely this year but without a set timeline.

Articles in this Cluster

Euro zone inflation edges higher, hitting ECB's 2% target in June

01-07-2025

Euro zone inflation rose to 2% in June, matching the European Central Bank’s target, after 1.9% in May. Core inflation held at 2.3%, while services inflation edged up to 3.3%. Country data showed mixed moves, with Germany easing and France and Spain ticking higher. Markets now expect the ECB to keep its deposit rate unchanged in July and potentially cut by 25 basis points in September. ECB Chief Economist Philip Lane said the disinflation cycle from the 10% peak to 2% is largely complete, but the bank will remain data-dependent and avoid reacting to one-off blips. Risks include sticky services inflation, oil volatility linked to Middle East tensions, and possible U.S. trade tariffs. The euro rose about 0.3% against the dollar after the data.
Entities: European Central Bank, Euro zone inflation, Core inflation, Services inflation, ECB deposit rate • Tone: analytical • Sentiment: neutral • Intent: inform

European Central Bank's latest rate cycle is 'done,' chief economist says

01-07-2025

ECB Chief Economist Philip Lane said the bank’s recent tightening cycle aimed at reversing the 2021–2022 price shocks is finished, with euro zone inflation back near target at 1.9% and the policy rate reduced to 2%. While the ECB stands ready to act if the medium-term outlook or inflation expectations shift, it now aims to avoid overreacting to small deviations, focusing on energy markets, exchange rates, and persistent domestic factors. Belgian central bank chief Pierre Wunsch added that risks to inflation and growth are tilted to the downside, implying any next move is more likely a further rate cut if growth fails to improve.
Entities: European Central Bank, Philip Lane, euro zone inflation, policy rate, energy markets • Tone: analytical • Sentiment: neutral • Intent: inform

European markets on July 1: Stoxx 600, FTSE, DAX, tariff deadline

01-07-2025

European stocks were set for a mildly positive open, with futures pointing to small gains for the DAX, CAC 40, and FTSE MIB, and the FTSE flat, as investors weigh upcoming euro zone inflation data and a looming U.S. tariff deadline. Belgian central bank chief Pierre Wunsch said euro area inflation risks are now tilted to the downside and suggested any further ECB moves would more likely be rate cuts if growth—especially in production—fails to pick up. The ECB recently cut rates to 2% as inflation eased to 1.9%. Globally, markets are watching U.S. trade talks as a 90-day tariff reprieve nears expiry; Treasury Secretary Scott Bessent warned tariffs could snap back without progress, while Canada rolled back its digital services tax to aid negotiations. Key Tuesday focal points include euro zone flash inflation (seen at 2%), German unemployment, U.K. house prices, and earnings from Sodexo and Sainsbury’s, alongside continued coverage of the ECB forum in Sintra.
Entities: Stoxx 600, DAX, CAC 40, European Central Bank (ECB), Pierre Wunsch • Tone: analytical • Sentiment: neutral • Intent: inform

Despite Pressure From Trump, Powell Remains Patient on Rate Cuts - The New York Times

01-07-2025

Fed Chair Jerome Powell reiterated a patient, data-dependent approach to interest rate cuts despite escalating pressure from President Trump to ease quickly. Speaking at the ECB’s conference in Sintra, Powell said most Fed officials expect cuts this year but offered no timing, emphasizing meeting-by-meeting decisions amid heightened global uncertainty, including tariff policy. While the ECB has cut rates eight times and the Bank of England has eased cautiously, the Fed is holding steady given a still-solid U.S. economy. Divisions within the Fed remain over the timing and size of cuts, with some Trump-appointed officials favoring an earlier move. Policymakers globally warned that geopolitics and trade shifts complicate inflation forecasts; Europe sees rates well positioned as euro-area inflation nears target, and the U.K. expects further gradual easing despite temporary price bumps. Powell aims to hand off a stable economy as his term nears its end.
Entities: Jerome Powell, Donald Trump, Federal Reserve, European Central Bank (ECB), Bank of England • Tone: analytical • Sentiment: neutral • Intent: inform