Although headline inflation in Europe is falling, because fuel prices are declining. Core inflation continues to rise. The ECB will only stop raising rates when core inflation has fallen back towards 2% or if the economy falls into recession---and by that I do not mean a mild slowdown. Despite the fact that the economy's response to rising rates lags, the ECB will be concerned about inflation becoming entrenched. The risk that the ECB raises rates too much remains.
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| Source: Trading Economics |
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