Eurozone Inflation Outlook: ECB Forecasts Continued Decline

Members of the European Central Bank (ECB) expressed confidence that inflation across the Eurozone would continue to decline, though concerns lingered following last month's rate cut amid unexpected economic setbacks, according to minutes from the ECB's latest meeting published by Reuters on Thursday.

During its June 6 meeting, the ECB decided to lower its key interest rates by 25 basis points, a move that had been anticipated after prior indications, but the timing of any further cuts remained uncertain until there is greater certainty that inflation will approach the target rate of 2% by next year.

The ECB has signaled that there will be no adjustments to interest rates at the upcoming July 18 meeting, citing persistent inflation pressures in services sectors, while leaving open the possibility of another rate cut in September.

"Some members expressed reservations that the data since the last meeting have not strengthened their confidence in reaching the 2% inflation target by 2025. This suggests that the rate cut may not fully align with the principle of data dependence, arguing for maintaining current interest rates," the meeting minutes revealed.

However, despite these reservations, all ECB members except Austrian central bank chief Robert Holzmann ultimately supported the rate cut in June.

Several ECB members noted that wage growth exceeded expectations and inflation appeared more persistent than forecasted, indicating risks tilted towards higher inflation levels than initially projected.

"This implies a need for ongoing flexibility, which could continue to exert upward pressure on prices, even as wage increases typically lag behind. Therefore, any delay in achieving the inflation target could complicate...