David McNamera: Sticky inflation won’t alter ECB’s rate cut decision

Uptick in services may embolden the hawks at the ECB to push for a more gradual decline in rates following the expected 25 basis point cut on Thursday

The sharp rise in wages across the eurozone in recent years, which has underpinned services inflation, appears to be moderating sharply. 

Inflation data across the eurozone came in slightly higher than expected in May, but are unlikely to alter the ECB’s monetary policy decision on Thursday.

As signalled by earlier releases from Spain and Germany, the eurozone inflation data came in at a slightly higher rate than forecast in May. Annual inflation ticked up to 2.6% in May, from 2.4% in April, slightly above the consensus of 2.5%. Two factors drove this rise in May.