Market Overview: Rising Inflation Will Hinder ECB's Aggressive Rate Cuts

Foreks - Economists Claus Vistesen and Melanie Debono from Pantheon Macroeconomics argued in a note to their clients that the rise in inflation in the Eurozone will prevent the European Central Bank from cutting interest rates more aggressively next month. Vistesen and Debono suggested that last week's business sentiment surveys highlighted the threat of a contraction in the economic bloc, which could fuel calls for a half-point cut instead of a quarter point at the policy meeting in December. However, according to Pantheon’s forecasts, inflation is expected to rise this month, exceeding the ECB’s 2% target. The economists believe this will keep policymakers cautious, making a 25 basis point cut the most likely decision.