Moneyfarm Chief Investment Officer Richard Flax’s comments on the latest Eurozone inflation data were published on the Guardian business live blog earlier this week. Here’s what Richard had to say about the path back to the 2% central bank target.
Eurozone inflation data adds weight to the argument for monetary stimulus
“Eurozone inflation dipped to 2.4% in March, coming in below the predicted 2.6%. Today’s data aligns with expectations of a cooling economy and adds weight to the argument for monetary stimulus.
Christine Lagarde’s previous indication that the ECB may not commit outright to a path of rate cuts suggests a cautious approach, but the consensus among economists leans towards a potential cut as early as June, pending further data on wage growth trends.
However, the stance of the newest ECB board member, Piero Cipollone, introduces an element of divergence within the institution. Cipollone’s caution against fixating solely on slowing wage growth hints at a potential push for rate cuts sooner rather than later, possibly as early as the April 11 meeting.
The challenge here for the ECB is that reaching the last mile target inflation rate of 2% may prove more arduous than anticipated, with incremental decreases seen as most likely.”
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