ECB Likely to Keep Eyes on Lower Rates as Stagflation Fears Mount -- Market Talk

Dow Jones01-07

1610 GMT - The looming spectre of stagflation won't deter the European Central Bank from cutting rates this month, ING macro chief Carsten Brzeski writes in a note to clients. German inflation sped up more than expected last month, figures showed Monday, in a development likely to drag price rises higher in the wider eurozone. That increases the currency area's risk of stagflation, or the unwanted combination of rapid price increases and a sputtering economy, Brzeski says. But the ECB will likely overlook concerns around rising inflation and bring rates to a less restrictive level at its January meeting, he says. "The desire to stay ahead of the curve remains a compelling reason to return interest rates to neutral as swiftly as possible," Brzeski says. (joshua.kirby@wsj.com; @joshualeokirby)

 

(END) Dow Jones Newswires

January 06, 2025 11:10 ET (16:10 GMT)

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