Inflation risks faced by the European Central Bank

Aihucha News, September 13: Current indicators appear that the European Central Bank will expect the inflation rate to remain above 3% next year. This is consistent with two key parts of the inflation market. Swap managers who use inflation derivatives to hedge their portfolios remain confident that euro zone inflation will remain above 2.8%. At the same time, the market's inflation expectations have worsened since the start of the ECB's tightening cycle, and forward swap rates have risen by about 50 basis points since July 2022. The ECB is in an unenviable position given a recent series of weak economic indicators, and policymakers may still choose to raise interest rates this week given the message from inflation markets.