Eurozone CPI rose 4.0% YoY in October, up from 3.8% in September and the highest
since Sep 2023, ECB data showed, taking inflation to roughly double the ECB's 2%
target and strengthening the case for further tightening. President Lagarde said
policy direction is clear; several Governing Council members this week warned
October's pause does not mean the tightening cycle is over. Investors and
analysts expect the ECB to act in December, when updated quarterly staff
projections for the 21-member euro area will be published. Markets price the
deposit rate rising from 2.5% now to around 3% or higher next year. Inflationary
pressure remains concentrated in energy, but the ECB aims to prevent
pass-through to wages and prices; its internal wage tracker projects a marked
slowdown in eurozone wage growth by 2027.
