MARKET OUTLOOK - Stubborn Service Inflation Won't Please the ECB

Moody's Analytics economist Kamil Kovar suggested that service price inflation will pose challenges for interest rate decision-makers at the European Central Bank. According to data released today, headline inflation in the Eurozone rose to 2% this month. Kovar noted that this is partly a result of base effects from energy prices, but that service prices also continue to remain sticky. "This report dispels optimism regarding a slowdown in inflation as a whole," Kovar stated, adding, "This situation could slow down the pace of interest rate cuts that the Central Bank had planned."