Caterpillar Macro: Expectations for a rate cut by the European Central Bank in October may be too high

Regional data from Germany shows a slowdown in overall inflation in September, but core inflation and service sector inflation remain stable, leading to a rise in the Euro. Economist Franziska Palmas from Capital Economics stated in a report, ‘The data from Germany indicates that the decline in service sector inflation, which the European Central Bank has been closely following, may be smaller than expected, mainly due to the impact of the Paris Olympics receding.’ She also mentioned that the market’s expectation of a 93% likelihood of a rate cut in October may be too high considering the current data.