MNI Eurozone Inflation Insight – August 2025

Little To Warrant Near-Term Cut

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• Eurozone August headline HICP inflation printed marginally below consensus expectations on Tuesday, at 2.05% (cons 2.1) for essentially unchanged from the 2.04% in July.
• As we flagged in our preview ahead of country-level data, such a marginal downside surprise was not sufficient to ensure a dovish tilt in EUR rates, with markets pricing for both the September and October ECB meetings to remain largely out of play.
• A cumulative 7-8bps of cuts are currently priced to year end, which some Governing Council members appear to be leaning against.
• One of the stronger views here, but not a surprising one, was executive board member Schnabel in a Reuters interview Tuesday morning, while some other ECB officials continue to flag a further cut as a possibility – as Bank of Lithuania Chairman Simkus, also in an interview on Tuesday morning.
• ECB President Lagarde meanwhile said on Monday (Sep 1) that the Eurozone inflation goal of 2% has been met, building on her comment from the Jul 24 press conference that “Inflation is currently at our two per cent medium-term target”.