According to Jinshi, Carsten Brzeski, head of macroeconomics at ING, wrote in a report that the easing of price pressures in Germany opens the door for further interest rate cuts in the eurozone. The annual inflation rate in June was 2.2%, down from 2.4% in May. Brzeski said that the decline in inflation across the eurozone means that the European Central Bank may make a second interest rate cut in September, having already cut interest rates last month.
However, as wage growth drives up prices in the services sector, inflation is likely to remain stubbornly above the ECB's 2% target for some time. Brzeski said: "We continue to see inflation hovering between 2% and 3% rather than returning to the 2% line."