Go to content
Investment Institute
Market Alerts

Inflation reaction : ECB to cut rates in October

KEY POINTS
Euro area headline inflation dropped 0.4pp to 1.8% yoy in September, below the 2% target for the first time since June 2021.
Excluding large energy base effects, core inflation edged down 0.1pp to 2.7% yoy.
The miss is important for the ECB that projected core inflation around 2.9% in September in their latest forecasts round. Seasonally adjusted measure shows further faltering core inflation momentum.
We change our call and now believe the ECB will implement another 25bps rate cut at its October meeting.
 

EMU

    

Headline HICP (in % yoy)

Headline

Core

Germany

France

Italy

Spain

August

September (AXA IM)

2,22,82,02,21,22,4
1,72,71,71,70,61,6

September (Refinitiv Consensus)

2,02,81,92,01,01,9

September (Flash)

1,82,71,81,50,81,7

Source: Eurostat, Bloomberg and AXA IM Research, October 2024

Euro area headline inflation dropped to 1.8% yoy in September (-0.4pt), slightly above our forecast but below consensus (2%). Energy deflation accounts for most of the deceleration (-6% yoy) but core inflation decelerated to 2.7% yoy (-0.1pt). It is in line with our forecast and below consensus (2.8%). But most importantly it is a large miss versus ECB September macroeconomic projections. The ECB had a core inflation averaging 2.9% in Q3, which implied a figure around 2.9% for September (Exhibit 2).

Exhibit 2: A large miss for the ECB

    Disclaimer

    The information on this website is intended for investors domiciled in Switzerland.

    AXA Investment Managers Switzerland Ltd (AXA IM) is not liable for unauthorised use of the website.

    This website is for advertising and informational purpose only. The published information and expression of opinions are provided for personal use only. The information, data, figures, opinions, statements, analyses, forecasts, simulations, concepts and other data provided by AXA IM in this document are based on our knowledge and experience at the time of preparation and are subject to change without notice.

    AXA IM excludes any warranty (explicit or implicit) for the accuracy, completeness and up-to-dateness of the published information and expressions of opinion. In particular, AXA IM is not obliged to remove information that is no longer up to date or to expressly mark it a such. To the extent that the data contained in this document originates from third parties, AXA IM is not responsible for the accuracy, completeness, up-to-dateness and appropriateness of such data, even if only such data is used that is deemed to be reliable.

    The information on the website of AXA IM does not constitute a decision aid for economic, legal, tax or other advisory questions, nor may investment or other decisions be made solely on the basis of this information. Before any investment decision is made, detailed advice should be obtained that is geared to the client's situation.

    Past performance or returns are neither a guarantee nor an indicator of the future performance or investment returns. The value and return on an investment is not guaranteed. It can rise and fall and investors may even incur a total loss.

    AXA Investment Managers Switzerland Ltd.

    You are now leaving the AXA IM CH AG website.

    AXA IM Schweiz AG is authorized as well as regulated by the Swiss Financial Market Supervisory Authority FINMA and is not responsible for the content of external websites.

    Go back Continue
    Go back Continue