Rabobank: Eurozone Inflation Risks Rise on Energy Shock
Rabobank warns that renewed US-Iran hostilities have pushed Eurozone inflation risks upward. June's softer flash CPI may give the ECB some leeway in July, but the earlier drop in energy prices has reversed, pointing to firmer readings ahead.
Rabobank analyst Bas van Geffen has warned that renewed hostilities between the US and Iran are tilting Eurozone inflation risks to the upside. The energy price decline that had been moderating price pressures earlier this year has reversed, threatening to keep headline inflation elevated.
June's flash CPI estimate came in softer than expected, which could buy the European Central Bank some breathing room at its July meeting. However, with energy prices now trending firmly higher, subsequent inflation prints are likely to be stronger. The bank sees the balance of risks shifting, making the ECB's task of returning inflation to target more challenging.
Source: FXStreet Forex News