Eurozone: Inflation falling again, too early to taper - HSBC

Eurozone inflation came in a little stronger than expected in June, at 1.3% y-o-y, but still lower than in May (1.4%), notes Fabio Balboni, European Economist at HSBC.

Key Quotes

“Core and services inflation both ticked up, likely linked to the beginning of the holiday season. Although headline inflation should pick up slightly in the second half of the year, underlying inflationary pressures remain muted as wage growth stalls. Mario Draghi's speech earlier last week sparked market concerns about a possible imminent tightening of monetary policy. We disagree. The ECB is rightly starting to prepare the market — and the governments — for QE eventually coming to an end, but we stick to our view that QE will continue (albeit at a slower pace) through Q3 next year, and  there won't be any rate hikes this year or next.”