Euro-area Inflation: Headline pressures rise – Nordea

Nordea’s Global Macro team of Tuuli Koivu, Jan von Gerich and Anders Svendsen note Euro-area inflation accelerated in September, driven mainly by energy and food. They note that core inflation remains relatively stable and broader price pressures are moderate and add that they do not expect the European Central Bank (ECB) to raise rates at the upcoming policy meeting.

Energy-driven rise keeps ECB cautious

"Euro-area inflation continued to accelerate in September mainly due to higher energy and food inflation."

"Furthermore, predicting the future energy price pressures is challenging at the moment given the extremely high uncertainty regarding the developments in the oil market. On one hand, the geopolitical tensions in the Middle East do not show signs of cooling down but at the same time, the most recent estimates about the global oil production and the positive information about the traffic in the Red Sea imply that there could be room for positive surprises from that segment."

"Thus, we keep keep our forecast of rate hikes in December and in March unchanged and do not see another hike already in October to be likely at this point."