The ECB seems increasingly confident

Among Eurozone households, savings intentions are the highest since surveys began.

Sources: European Commission Survey, tabulated by DWS Investment GmbH as of July/2024

*survey participants planning to increase the savings

“We continue to expect the ECB to cut the deposit rate by 25 basis points to 3.50% at the next ECB meeting on September 12,” explains Ulrike Kastens, European economist at DWS. Admittedly, recent declines in inflation mostly reflected falling energy prices, while the increase in service prices accelerated from 4.0% in July to 4.2% in August. Reports from the individual countries show that prices for package holidays and overnight stays in particular have risen.

After the end of the holiday season and the Olympic games in France, these prices are likely to ease somewhat in the coming months, but with some underlying pressures remaining due to wage increases. By contrast, the downward trend in consumer goods continued and weaker domestic demand will exert further downward pressure on prices over the next few months. No doubt, the ECB will continue to monitor a variety of indicators. Still, there are good reasons for its growing confidence that the inflation target of 2% can be reached again within the not-too-distant future.