German Inflation Hits ECB Target as Euro Zone Faces Economic Uncertainty

German inflation slowed to 2% in June, aligning with the European Central Bank's target for the first time this year. The reading, down from May's 2.1%, surprised economists who had anticipated a slight increase to 2.2%. This development follows eight consecutive ECB rate cuts since June 2024—a monetary easing cycle now likely to pause at July's meeting.

Eurozone inflation presents a fragmented picture. While France and Spain saw price growth accelerate, Italy held steady. The overall 20-nation bloc is expected to report 2% inflation, marginally better than May's 1.9%. Behind these numbers lies deeper concern: ECB Vice President Luis de Guindos warns of 'harsh uncertainties' that could stall economic growth through Q3.

Market attention now turns to whether disinflationary pressures from Europe's sluggish economy will dominate the narrative. The ECB's next MOVE hinges on sustainable target achievement—a verdict still pending as trade negotiations and global headwinds cloud the outlook.