Economists are ruling out a European Central Bank interest rate hike at next week's policy meeting, citing fresh data that shows inflation in the eurozone continued to ease in June.
The latest figures suggest that the central bank's primary mandate of price stability is being met without the need for further monetary tightening, shifting the focus to maintaining current policy levels rather than raising borrowing costs.
The cooling inflation trend aligns with recent sentiment data from the ECB's own consumer survey, which indicated that households have lowered their inflation forecasts for the coming year.
This shift in consumer expectations reinforces the view among market participants that the disinflationary process is gaining traction, reducing the urgency for policymakers to act aggressively.
While the general perception of economic conditions has deteriorated slightly, the specific outlook on price stability remains anchored.
Despite the favorable inflation data, geopolitical risks continue to cloud the economic horizon.