- Eurozone inflation accelerated more than expected, adding to uncertainty over the path of the European Central Bank's interest rate cut next week.
- According to data released by Eurostat on Friday, the consumer price index rose by 2.6% year-on-year in May, accelerating from 2.4% in April.
- While that rise was above the median forecast of 2.5% in a Bloomberg survey of analysts, it was in line with the estimate of the Bloomberg Economics Nowcast model.
- The index, which excludes volatile items such as food and energy, also beat expectations, accelerating to 2.9%.
- European Central Bank officials have warned of a volatile path for inflation as the rate of price increases has eased towards the 2% target after a historic high, but they are still expected to cut deposit rates from their current record level of 4% on June 6, ahead of both the US Federal Reserve and the Bank of England.
- Money markets still expect a quarter-point rate cut next week, but have trimmed expectations for additional cuts, with traders betting on two cuts this year and a 25% chance of a third.
