Price Growth Near ECB Target Ahead of Key Policy Decisions
Inflation in the euro zone reached 2.2% in November, a marginal increase from the previous month, according to preliminary figures released Tuesday by Eurostat. The reading sits just above the European Central Bank’s 2% target and slightly ahead of economists’ expectations of 2.1% in a Reuters poll.
The modest uptick comes as policymakers assess whether the bloc’s disinflation trend remains intact. While headline inflation has eased significantly from the highs of recent years, November’s data shows the path back to price stability may not be entirely smooth.
Services Inflation Leads Components
Eurostat reported that services once again exerted the strongest upward pressure on prices, with annual inflation rising to 3.5% from 3.4% in October. Persistent strength in this category continues to draw attention from ECB officials, who closely monitor services data as a signal of underlying inflation momentum.
Core inflation — which strips out volatile food, energy, alcohol, and tobacco prices — held steady at 2.4%. The unchanged reading underscores the ECB’s caution as it evaluates how quickly price pressures are easing across the bloc.
ECB Holds Rates as Easing Cycle Nears Its End
The ECB kept its key deposit rate at 2% for the third consecutive meeting in late October, maintaining a pause in its rate-cutting cycle. The central bank last reduced rates in June as headline inflation fell to its 2% goal for the first time in years.
Although borrowing costs have decreased from last year’s peak of 4%, top ECB policymakers have signaled that the easing cycle is approaching its final stages. Officials continue to emphasize a meeting-by-meeting and data-dependent approach, echoing concerns about uneven inflation dynamics across member states.
Lagarde Says Economy Is in a “Good Place”
Following October’s rate decision, ECB President Christine Lagarde told CNBC that the euro zone economy is “in a good place” from a monetary policy standpoint, while cautioning that conditions remain fluid. “Is it a fixed, good place? No,” she said. “But we will do whatever is needed to make sure we stay in a good place.”
Market watchers expect the ECB to remain on hold in the near term, with November’s slight inflation rise reinforcing the case for patience as policymakers await further data on wages, services inflation and economic activity heading into 2026.
