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Inflation Below 3.0% In The Eurozone

At less than 3.0% for the first time since 2021, the inflation figure for October should mean the end of the ECB’s rate hikes—good news for the eurozone sovereign bond.

By EC Invest

In October, inflation in the euro area no longer exceeded 2.9%, according to Eurostat, compared with another 4.3% in September. At this level, it has been at its lowest for just over two years.

With energy prices falling sharply again (-1.1% compared to the previous month and -11.2% over one year), inflationary pressures are dissipating in the euro area as elsewhere. Here and there, some sectors still show sustained price growth. This is the case for services, which, with an annual increase of 4.6% over one year, are now the engine that drives inflation.


But overall, pressures are slowing as the sharp rise in credit and erosion of purchasing power weigh on household demand and private sector investment.

While inflation still exceeds the European Central Bank’s 2.0% target, the delicate economic situation, demand is still slowing, and credit is falling sharply, leaving nothing good for investment. The economy as a whole should maintain the downward trend.

Therefore, everything leads us to believe that the ECB will no longer raise its key rates and are at a peak before going down in 2024.

This was good news for European sovereign debt when interest rates were approaching uncomfortably high levels for the eurozone’s most indebted countries.

This debt incorporates our defensive and balanced portfolios.

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