Eurozone Inflation Expected Above Target Until Spring 2027

Nordea's analysts have projected that Eurozone inflation dynamics will remain persistent, with headline inflation expected to stay above the ECB's target until spring 2027. Recent data has shown that inflation is slightly weaker than what was projected in June by the ECB, but only due to soft food prices. This slight weakness is not expected to lead to significant downward revisions to the forecast.

According to Nordea, core inflation will remain above 2% through 2028, supporting further ECB rate hikes. The analysts see this as a key factor in their projections, and expect that core inflation developments have been broadly in line with June's projections.