ECB's Hawkish Tone Meets Eurozone Economic Struggles: December Inflation Signals Mixed Trends

EUR

The tug of war between the European Central Bank's apparent hawkishness and the poor economic performance in the Eurozone continues. December inflation numbers were mixed. The headline index rebounded as energy subsidies were removed, although the more important core index continued on its downward trend, and is now squarely below the ECB’s repo rate.

This week, there is not a lot of economic data on the docket. Focus among investors will be on speeches by ECB officials, specially chief economist Lane, who is expected to provide clarity on the ECB´s view of recent Eurozone economic weakness and its impact on monetary policy. Financial markets continue to see a decent chance of a start to easing in the Eurozone in the first quarter, although these expectations continue to be pushed further into the future in line with the broad repricing globally.

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Enrique Díaz-Álvarez

Analyst at Ebury – a leading global fintech company specialized in international payments, collections, and foreign exchange services for SMEs and midcaps. Ebury offers foreign exchange activity in over 130 currencies as well as cash management strategies, trade finance, and FX risk management. Authorised and regulated as an electronic money institution. Regulary ranked among the top forecasters in Bloomberg's FX forecast accuracy rankings. Ebury analysts also provide financial market reports in Polish, available on FXMAG.PL.

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ecb monetary policy european central bank eurozone economic performance repo rate hawkish tone core index December Inflation Headline Index Economic Struggles.

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EUR

Enrique Díaz-Álvarez

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