Eurozone Inflation Cools to 2.8% as ECB Expected to Hold in July

Inflation across the euro area cooled to 2.8% in June, down from 3.2% in May, with price growth slowing in Germany and other large economies including France and Italy, according to confirmed data. Core inflation, which excludes energy and food, also eased. The pullback followed a springtime spike in energy costs linked to conflict in the Middle East, and it undercut the case for another immediate interest-rate increase. The European Central Bank, which surprised markets in June with its first rate hike since 2023, lifting the deposit rate to 2.25%, is widely expected to keep policy unchanged at its meeting later in July as officials let that move filter through the economy. Markets price a high probability of a hold, though policymakers including Germany's Bundesbank president have cautioned that oil-price volatility and geopolitical risks keep the outlook uncertain. The central bank has stressed a data-dependent, meeting-by-meeting approach, leaving the door open to further tightening if energy prices climb again. For Germany, the euro area's largest economy, easing inflation offers some relief to households and businesses, even as growth remains subdued and trade tensions cloud the broader European outlook.