The ECB's Schnabel published a series of slides on the ECB website. She highlights sticky services inflation.
- Services inflation remains sticky, keeping headline inflation elevated
- Price pressures in services sector are broad-based and global
- Medium-term inflation projections often clustered around 2% target, but risks remain
- Wage growth expected to slow, but real wage catch-up still incomplete in parts of eurozone
- Labor market remains tight with high demand and persistent shortages
- Pass-through of higher wages to producer prices stronger in services sector
- Services demand has been resilient but showing signs of weakening
- Monetary policy transmission may be losing some effectiveness
- Geopolitical uncertainty and rise in trade restrictions pose risks to outlook
This doesn't sound like someone who is in a rush to cut. The market sees about a 33% chance of a cut on October 17 but 37 bps are priced in for December.
