Home›Forex›Central Banks›ECB minutes spotlighted as traders price a September r…

ECB minutes spotlighted as traders price a September rate hike

Euro area inflation was confirmed at 2.9% year over year, while core inflation held at 2.5% and the ECB’s meeting minutes are expected to show a September hike bias.

Reported · Written up by our desk · Central Banks

Traders are focusing on the ECB minutes from its July meeting, where policy rates were left unchanged, as markets price in a rate hike in September. Action Forex said it expects the minutes to lean toward a September increase, while suggesting that guidance beyond that point is likely to remain limited.

In other central bank updates, the People’s Bank of China kept its Loan Prime Rates unchanged, leaving the 1-year LPR at 3.0% and the 5-year LPR at 3.5%, which Action Forex said aligns with the fact that the LPRs typically track the 7-day reverse repo rate that has not been adjusted recently.

For the euro area, final inflation data confirmed the flash estimate of 2.9% year over year, with core inflation at 2.5% year over year. The same source noted that underlying inflation measures were broadly stable, with price pressures not rising significantly after the energy shock, while the euro area Q2 Labour Cost Index eased to 3.1% from 3.2% quarter over quarter year over year, supporting a view that wage pressures are moderating.

In the UK, July CPI was reported broadly in line with expectations, with headline inflation rising to 2.9% year over year, driven by a 13% increase in the Ofgem energy price cap from July 1. Action Forex also said food inflation declined further to 1.2% from 1.6%, which it linked to reduced spillover risk and helped reduce Bank of England pricing for the rest of the year.

More like this

Sources