Market Analysis

Eurozone inflation may remain stubborn, according to Bundesbank President Joachim Nagel, suggesting that while a rate cut by the European Central Bank (ECB) in June is likely, further easing might not necessarily follow. 

Nagel's cautious stance acknowledges the uncertainty surrounding the rate path, particularly in light of signals from the US Federal Reserve indicating a potential delay in its own easing measures.

While Nagel acknowledges the anticipated rate cut in June, he emphasizes concerns about inflation, especially in services driven by robust wage growth. He suggests that a single rate cut shouldn't automatically imply a series of cuts, highlighting the need to remain flexible in response to evolving economic conditions.

Nagel's remarks diverge from the more optimistic views of some policymakers who lean towards further easing. He underscores his worries about the persistence of services inflation compared to goods inflation, expressing doubts about a timely and sustained return of inflation to target levels.

Paraphrasing text from "Investing" all rights reserved by the original author.