Eurozone: Modest disappointment in flash inflation – Nordea

Anders Svendsen, analyst at Nordea Markets, notes that the Eurozone’s core inflation remained unchanged in August, according to the flash estimate, contrary to expectations of a small increase.

Key Quotes

“In any case, core inflation is way too low for the ECB and can easily justify a big September easing package.”

“Euro-area headline inflation came in at 1.0% y/y in August (consensus: 1.0%, July: 1.1%), while core inflation was a little lower at 0.9% y/y (consensus: 1.0%, July: 0.9%).”

“The numbers do not change our view that the ECB will deliver a big easing package in September (10 bp cut, QE & more dovish forward guidance), and the risk is also tilted toward more easing down the road. Market reaction is very muted.”