Top.Mail.Ru
empty
30.05.2025 01:40 PM
Inflation Is Almost Under Control

While the euro continues to hold its ground against the dollar, European Central Bank (ECB) Governing Council member Fabio Panetta indicated during an interview today that inflation in the eurozone is almost fully contained but warned that further interest rate cuts require carefully considered decisions.

This statement, made amid growing discussions about the ECB's monetary policy outlook, points to the regulator's cautious approach toward future actions. Panetta, emphasizing the progress made in combating inflation, suggested that further rate cuts are likely, but his comments were aimed at tempering market expectations.

This image is no longer relevant

The head of the Bank of Italy welcomed the progress but cautioned that from now on it would not be easy to decide whether to continue lowering borrowing costs. "Disinflation has not caused significant damage to the economy and is now nearing completion," Panetta said in his annual speech to Italy's financial elite in Rome. "The previous declines in inflation rates clearly leave less room for further interest rate cuts. However, macroeconomic prospects remain weak, and trade tensions could worsen them, so now is not the time to retreat."

Panetta's comments represent a step beyond the ECB's previous statement last month that "the disinflation process is on track." Notably, today Spain reported its first slowdown in annual consumer price growth below 2% in seven months. In Italy, the monthly consumer price index showed no change after rising 0.1% in March, and the annual inflation rate fell to 1.7% from 1.9%. These data present a mixed picture for the Italian economy. On one hand, the stagnation in the monthly consumer price index may suggest weakening consumer demand or even the onset of deflation. On the other hand, the slight decline in annual inflation is a positive signal indicating the effectiveness of current economic policies.

It's important to note that a drop in inflation to 1.7% brings Italy closer to the ECB's target level, opening the door to more flexible monetary policy. However, the absence of growth in consumer prices may also signal the need for stimulus measures to support the economy and maintain consumer demand.

The ECB is expected to cut rates next week, and a survey of economists suggests that policymakers should not wait too long before cutting rates again to avoid confusing investors.

Panetta warned that officials would face several tough challenges. "A pragmatic and flexible approach will be needed, closely monitoring liquidity conditions and signals from financial and credit markets," he said. "Setting the course for monetary policy in the coming months will not be easy. Each decision will need to be assessed based on the available data and prospects for inflation and growth."

Panetta described the economic outlook as "unstable" and potentially subject to risks in any direction. "Further strengthening of the euro, rising uncertainty, or tighter financial conditions could intensify the recessionary impact of tariffs," he said. "Moreover, a larger-than-expected increase in Chinese exports to Europe could lead to a decline in production and inflation."

Technical Outlook: EUR/USD

Currently, buyers need to focus on reclaiming the 1.1340 level. Only then will it be possible to aim for a test of 1.1375. From there, it could move toward 1.1420, but achieving this without support from major players will be difficult. The ultimate target would be the 1.1450 high. If the pair declines, I expect significant buying interest only around 1.1300 level. If no buyers appear there, it would be wise to wait for a drop toward 1.1260 or consider opening long positions from 1.1221.

Technical Outlook: GBP/USD

For pound buyers, overcoming the nearest resistance at 1.3495 is crucial. Only then can they aim for 1.3540, which will be challenging to breach. The ultimate target would be the 1.3585 level. In case of a decline, bears will try to regain control over 1.3465. If successful, breaking this range would seriously damage the bulls' positions and push GBP/USD toward the 1.3435 low, with a potential move to 1.3410.

Jakub Novak,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

XAU/USD. Analysis and Forecast

Today, gold maintains a positive tone; however, bulls are acting cautiously, preferring to refrain from aggressive buying ahead of the release of the important U.S. Non-Farm Payrolls (NFP) report

Irina Yanina 15:30 2025-06-06 UTC+2

WTI. West Texas Intermediate. Traders Await NFP

Prices for West Texas Intermediate (WTI) crude oil remain in the middle of a three-day range. Prices are supported by hopes for the resumption of trade negotiations between the U.S

Irina Yanina 11:23 2025-06-06 UTC+2

ECB Meeting Results and Christine Lagarde's Press Conference

The euro responded with a significant rise following the ECB's decision to cut interest rates. But why did this happen? Let's break it down. The key reason behind the euro's

Jakub Novak 10:54 2025-06-06 UTC+2

What to Pay Attention to on June 6th? Fundamental Event Analysis for Beginners

Analysis of Macroeconomic Reports: A fairly large number of macroeconomic publications are scheduled for Friday, but most of them will not interest traders. For example, the report on industrial production

Paolo Greco 10:11 2025-06-06 UTC+2

Overview for the GBP/USD pair on June 6, 2025

The GBP/USD currency pair continued its upward movement on Thursday, trading overall calmly and without any rush. There was no news for either the British pound or the U.S. dollar

Paolo Greco 05:47 2025-06-06 UTC+2

Overview for EUR/USD on June 6, 2025

The EUR/USD currency pair continued to trade very calmly on Thursday, even when the results of the ECB meeting became known. It should be noted that there was no intrigue

Paolo Greco 05:21 2025-06-06 UTC+2

The EU Economy Will Not Suffer, According to Lagarde

Today, a meeting of the European regulator took place, where the obvious and expected decision was made to lower all three interest rates by another 25 basis points. The decision

Chin Zhao 02:56 2025-06-06 UTC+2

USD/JPY. Analysis and Forecast

During the European session on Thursday, the Japanese yen maintained stability, allowing the USD/JPY pair to hold above the key 143.00 level amid a moderate rise in the U.S. dollar

Irina Yanina 12:04 2025-06-05 UTC+2

AUD/JPY. Analysis and Forecast

Today the AUD/JPY pair is attracting new buyers. Recent Chinese data, including the private Caixin survey, showed a moderate acceleration in growth in China's services sector

Irina Yanina 11:36 2025-06-05 UTC+2

USD/CAD. Analysis and Forecast

The USD/CAD pair continues to decline. Fundamental factors support bearish sentiment, indicating that the path of least resistance for spot prices remains downward. Reports of a trade agreement between

Irina Yanina 11:33 2025-06-05 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.