EUROPEAN INFLATION TO DROP TO 10 PERCENT IN NOVEMBER 2022, WILL THE ECB BE DOVISH?

EUROPEAN INFLATION TO DROP TO 10 PERCENT IN NOVEMBER 2022, WILL THE ECB BE DOVISH?

European inflation drop in November. Eurozone inflation slowed for the first time in 18 months. This provides a glimmer of hope to the European Central Bank in its struggle to cope with the worst price spikes in a generation. Eurostat reported euro zone inflation to hit 10 percent in November 2022 (year-on-year/yoy), down from 10.6 percent in October. The decline in the inflation rate was driven by a slower rise in energy and service costs, even as food prices grew faster.
ECB officials have highlighted the data as critical to their assessment of plans to hike the benchmark rate by 75 basis points for the third straight time. The ECB is likely to study the report at its scheduled meeting on Wednesday, their last meeting before the Dec. 15 decision. European inflation drop in November. Markets are pricing in a possible rate hike of 57 basis points by the end of the year. The prospect of softening price pressures will bring some relief to the ECB after trying to contain the spike in inflation in the last six months.
This weakness coincides with United States (US) statistics from October moving in the same direction, prompting some Federal Reserve (The Fed) officials to consider reducing the pace of interest rate hikes. Maeva, senior economist at Bloomberg Economics, said this would be welcome news for the ECB and reinforced the view that the pace of rate hikes will slow in December to 50 basis points from 75. “Any relief will be tempered by the fact that underlying pressures remain too high. strong.” he concluded.

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