Eurozone inflation falls below target for first time since September 2024

Eurozone inflation fell below target in May, ahead of the European Central Bank (ECB) monetary policy meeting this week.

At 1.9%, May’s reading marked the lowest since September 2024. Strong progress on bringing inflation back to target, coinciding with elevated uncertainty surrounding the effects of tariffs on economic activity, will encourage the ECB to lower borrowing costs on Thursday.

Beyond this, we expect one further cut in September, taking rates to 1.75% by year end.