Threatening inflation puts the ECB in the spotlight.
It was predictable that it would increase, but not to 8.1%. The latest data show that Eurozone inflation increased to 8.1% in May on the annual scale (HICP), much more than the 7.7% estimates and 7.4% Eurostat survey published last Friday. Core CPI also see at 3.8% in May compared to 3.5% in April and market expectations. Energy and food prices have jumped much more than others, respectively, with 39.2% and 7.5%, which is the main reason for such a big difference between the CPI and Core CPI numbers. Service sector inflation raised only 3.5%.
After yesterday's Germany's annual inflation, which had reached 8.7%, now these scary numbers put the ECB monetary policy meeting in the Netherlands on July 9 in the spotlight. Inflation in France also raised by 5.4% in May, up from 5.4% in April.
According to published data, now we expect to see the ECB announce the ECB plans to raise interest rates in July for the first time in more than a decade. The Lagarde speeches in the last weeks tell us that these numbers would be an acceptable reason for interest rate hikes. Central Bank in Europe also must clarify its conclusion about large-scale asset purchases.
As a reaction, stock markets lost some of their last week's gains as the expected tightening policies can affect the economic growth of the block. So far today, DAX in Germany and CAC40 in France are losing about 0.8% on average.
After published data, also we can see that the EU 50, which started to recover above 20 DMA after a long-term downtrend, faced some resistance. Technically uptrend was started; however, bulls in the chart can go further only if they can breathe above the primary resistance at 4,000 Euro.
