ECB policymakers have been worried about an uptick in inflation towards the end of the year. But so far, that hasn't quite materialised. We will be getting the first taste of Q4 readings today, so we'll see about that. That being said, base effects are still to be the likely culprit in deciphering any slight stubbornness in price pressures for the months ahead.
The narrative continues to be the case that the disinflation process is well intact. It is just that there might be a couple of bumps in the road. And so, that will keep the ECB on course to ease further going into next year.
The key variable impacting the pace of the rate cuts is now the economy. So, barring any major resurgence in inflation, that will be the bigger focus for market players as well.
Looking to German inflation for October, it is expected that headline annual inflation will come back up to 1.8%. The EU-harmonised reading is also estimated to tick up to 2.1%, up from 1.8% previously.
But again, the main thing to watch is the core reading - which slowed to 2.7% in September. That is still holding above the pivotal 2% mark and will continue to be a key figure to watch in the months ahead.
Here's the agenda for today:
- 0900 GMT - North Rhine Westphalia
- 0900 GMT - Hesse
- 0900 GMT - Bavaria
- 0900 GMT - Baden Wuerttemberg
- 0900 GMT - Saxony
- 1300 GMT - Germany national preliminary figures
Do note that the releases don't exactly follow the schedule at times and may be released a little earlier or later.
