KOF Monetary Policy Communicator for the Euro Area, October 2024

The ECB’s Governing Council continued its monetary policy loosening by lowering its three key ECB interest rates by 25 basis points. The Governing Council expects inflation to rise again in the coming months due to base effects, before reaching the ECB inflation target in 2025.

Annual HICP inflation in the euro area has decreased to 1.7% in September, from 2.2% in August. Food price inflation stands at 2.4% and energy prices fell by 6.1%, continuing the drop recorded in August.

Goods inflation remained at 0.4% while services inflation declined slightly to 3.9%. The ECB expects that high wage growth will maintain strong domestic price pressures, despite easing labour costs and profits having a dampening effect on inflation. Most measures of longer-term inflation expectations currently stand at around 2%.