ECB Flash CPI Estimate Hits 103.7, Market Eyes Core Services
The European Central Bank (ECB) has released its flash estimate of Consumer Price Index (CPI) for August, which came in at 103.7, a 0.54% increase from the previous month's reading of 103.24.
Historically, this first read on euro area inflation sets the tone for the rates complex into the next ECB meeting, with the final estimate rarely revising enough to matter.
The market focuses on the year-over-year rate and core and services components, as it is services stickiness rather than headline energy effects that has driven the policy reaction function in recent cycles.
According to Newsquawk, national prints from larger member states typically precede the aggregate by a day or so and usually give the direction away in advance. The transmission channel is the front end: a hot or cold read reprices the expected path of cuts or holds at the upcoming meeting rather than the long end.