According to Jinshi, Capital Economics economist Reynolds said that the eurozone inflation data will reinforce the ECB's policymakers' tendency to act very cautiously. The annual inflation rate fell from 2.6% in May to 2.5% in June, but the core inflation rate and service industry inflation rate remained at 2.9% and 4.1% respectively, higher than expected.
He said the fact that services, the sector most sensitive to domestic economic conditions, had remained high this year particularly reinforced the case for caution at the ECB. Both Lagarde and chief economist Philip Lane said they needed more information before considering another rate cut.
He added that unless there were major surprises in economic data over the next two weeks, the ECB seemed almost certain to keep interest rates unchanged at its July 18 meeting.