Europe’s inflation held steady in August as European Central Bank keeps an open mind on rates
Associated PressFRANKFURT, Germany — Annual inflation held steady in Europe in August as food prices raced ahead of falling fuel costs, but there was no clarity about whether the European Central Bank will pause its record series of interest rate hikes. European Central Bank President Christine Lagarde has said that the interest rate decision at the Sept. 14 policy meeting will depend on incoming data, a shift from a year-long series of meetings where rate increases had been announced ahead of time. Inflation is expected to resume its decline in coming weeks, but with unemployment at records lows and wage growth strong in the labor-intensive services sector, “we think that it will be a long time before services inflation falls to a level consistent with the ECB hitting its inflation target.” Inflation has fallen to lower levels in the U.S. at 3.2%, but U.S. Federal Reserve Chair Jerome Powell has said more rate increases may be needed to return inflation to 2%. In August, the European Commission’s economic sentiment indicator combining measures of business and consumer confidence fell to its lowest reading in 10 years excluding the pandemic, while purchasing managers’ surveys indicate activity is slowing.