OUR euro zone inflation retreated more than expected, but the ECB president Christine Lagarde sees no “clear signs” that it has peaked and promises further rate hikes. Consumer prices, excluding fuel and food, rose 5.3% compared to May 2022. Thus, inflation slowed down compared to the previous month, when prices rose by 5.6%. It was also less than Bloomberg economists’ forecast of 5.5%.

General inflationeventually slowed to 6.1%, recording the lowest level in more than a year, mainly due to falling energy prices. The data also includes an easing of inflationary pressures in the eurozone’s four largest economies and will be welcomed by policymakers and monetary policy makers as Europeans grapple with the cost-of-living crisis. However, the fact that structural inflation remains high means that the ECB will continue its move to higher interest rates at its upcoming meeting, despite the recession that Germany has slipped into and despite economic risks. At the latest ECB meeting, developments on the price front were described as “generally worrying”.

When the latest data was released, Ms. Lagarde stressed that “we have made it clear that there is still scope for raising interest rates to levels that will sufficiently contain the economy.” Bloomberg economist Maeva Cousins ​​shares her opinion, stressing that “it is still too early, and we even predict that some underlying events and statistical errors will lead to a re-growth of structural inflation in the summer, and the ECB will start new interest rate hikes.” Investors and economists are forecasting that the ECB will begin another 25 basis point hike on June 15 and expect there to be another hike before the end of this cycle of rising borrowing costs, which has sent euro interest rates up to 3.25%. from the negative levels at which they were in July last year. According to representatives of the Bank, the return of inflation to the target level of 2% is necessary to stimulate economic growth and financial stability. The ECB has warned that a move to restrictive monetary policy makes financial markets vulnerable and also tests the resilience of households, businesses, governments and the property market.