European Central Bank Holds Course as Eurozone Inflation Eases

Euro zone inflation slowed to 2.8% in June, well below the 3.0% forecast, while core inflation fell to 2.4% after a drop in food, energy and services prices. The drop eases pressure on the European Central Bank (ECB) to deliver another rate increase soon. The ECB raised its key rates on 11 June and President Christine Lagarde defended that decision, saying the June hike remains appropriate despite a recent Iran‑U.S. cease‑fire and lingering core‑inflation risks. Policymakers indicated there is no rush for a follow‑up hike before the next policy meeting on 23 July, although many economists still expect another move in September or October.

Currency markets reflected the softer data: the euro traded around 184.95 against the yen, with technical analysis suggesting a modest short‑term bullish bias. G10 currency moves were limited, and the euro slipped against the dollar after the June CPI release. Global investors also watched US labour‑market data and US Treasury yields, but the euro‑area price‑trend remained the key driver of market sentiment.

The ECB’s next decision will gauge whether lower oil prices and a tentative peace outlook translate into sustained inflation moderation.