Eurozone inflation continued to gain momentum in October, accelerating to 4.0% from 3.8% in September, its fastest pace in three years. Energy remains the main driver, with prices rising 20.8% year-on-year.
Core inflation held steady at 2.5%, although services inflation edged up again, from 3.2% to 3.3%, suggesting some persistence in domestic price pressures.
The continued acceleration in inflation, alongside stronger-than-expected GDP growth, strengthens the case for monetary tightening.
However, the European Central Bank (ECB) faces a delicate balancing act, with risks to the growth outlook still tilted to the downside.
Even so, following last week’s decision to hold rates, we continue to expect the ECB to raise rates at its next meeting
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