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On Thursday, Germany’s inflation rate y/y for August decreased to 1.9%, down from 2.3% in July. Similarly, Spain’s inflation rate y/y for August dropped to 2.2% from the previous 2.8%. This led to a decline in the Euro, with EUR/USD closing at 1.0770 after falling 0.38%.
(EUR/USD Daily Price Chart, Source: Trading View)
European Central Bank (ECB) policymaker Joachim Nagel cautioned on Thursday that the ECB should avoid cutting interest rates too quickly, despite inflation rate is progressing towards the 2% target. He is known for his hawkish stance favouring higher rates, acknowledged that while the target is now within reach, risks remain due to rising wages and a stronger economic recovery.
Therefore, the ECB is expected to cut borrowing costs on September 12th after successfully reducing inflation from double digits in late 2022 to 2.6% in July. However, price growth is not anticipated to stabilize at the target until late next year.
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