High Core Inflation Means Two More ECB Rate Increases Likely

Eurozone core inflation will take longer to slow than headline inflation, driving further monetary policy tightening over the summer, Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, writes in a note. Core inflation will remain around 5.5% over the summer, before declining to 3.5% by the end of the year, he writes. While there is clear evidence of slowing core goods inflation, services inflation is still rising, which should be enough for two more 25 basis-point interest rate increases by the European Central Bank, next month and in July, according to Vistesen. Any turmoil related to the U.S. debt…

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