Eurozone's Price Tension and Business Activity: Assessing the ECB's Challenge
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The Eurozone continues to grapple with price tension, presenting a significant challenge for the European Central Bank (ECB). The latest statistics highlight the persistent issue of prices remaining tense, underscoring the need for careful policy considerations.
Andrey Goilov, an analyst at RoboForex, notes that the Consumer Price Index (CPI) in the Eurozone experienced a decline of 1.9% month-on-month in May, following a previous drop of 3.2%. While this decline is considered positive, the lack of a steady and continuous decrease in prices raises concerns.
FXMAG.COM:
In light of the latest data from the Eurozone, what forecast can you make for the EUR?
Andrey Goilov, analyst at RoboForex:
The latest statistics from the Eurozone show that prices remain tense. This is the main problem for the European Central Bank.
The CPI in the Eurozone in May demonstrated a decline by 1.9% m/m after a previous drop by 3.2%. This is also quite good but the fact that prices are not falling steadily is not the best possible signal.
At the same time, business activity in the region is not the most stable. The final PMI in production in June dropped to 43.4 points from 43.6 points. The PMI in services fell to 52 points from 52.4 points earlier. This decrease in business activity is not yet too noticeable, which means there are no reasons for panicking yet. However, the presented reports make it clear that business is still in trouble.
Earlier the ECB gave indications of a rise in the interest rates. For the EUR, this is a good foothold but the potential for tightening the credit and monetary policy has already been accounted for in the quotes.
