Investors hoping the European Central Bank to lower interest rates by nearly a
percentage point in the first half of 2025 may be disappointed if the most
recent inflation data from Germany and Spain is any indication.
Later today, the harmonised index of consumer prices (HICP)
for the euro zone is estimated to have increased 2.4% in December, which is
faster than the 2.2% increase in November.
Prices are already rising, according to indicators, with Germany and Spain
reporting faster-than-expected increases in inflation.
Before the ECB's next meeting on January 30, this week's
pricing data will be the final one. If there are any indications that inflation
is decreasing further, the ECB would have more
With natural gas prices at 14-month highs, the ECB may face
challenges in the energy sector. A smaller decline in energy prices was the
cause of Germany's December inflation rate, which was higher than expected.
With less gas in store than in recent years and the
termination of a decades-long agreement for Russia to sell gas to Europe via
Ukraine, prices are expected to be high even though the 2022 spike won't happen
again.
A similar predicament confronts Britain as wage growth
exacerbates inflationary pressures. On Monday, rates on British 30-year
government bonds nearly reached their highest level since 1998.
Markets continue to hold out hope that Donald Trump, the incoming president of
the United States, will not pursue a tariff policy as aggressively as
anticipated. Even though Trump denied a Washington Post article,
Even though the 2022 increase won't occur again, prices are still projected to be high since there is less gas in stock than in previous years and because a decades-long deal for Russia to sell gas to Europe through Ukraine has been terminated.
Britain faces a similar situation as inflationary pressures
are intensified by wage increases. British 30-year government bond rates almost
hit their highest level since 1998 on Monday.
The markets are still hopeful that Donald Trump, the next US president, won't
implement a tariff strategy as vigorously as
.Key developments that could influence markets on Tuesday:
Fed speakers: Federal Reserve
Bank of Richmond President Thomas Barkin speaks in Raleigh
Debt auctions: Germany reopening
of 2-year auction, United Kingdom (TADAWUL:4280) reopening of
30-year auction
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