Eurozone inflation figures released yesterday fell in June, the European Commission today confirmed, easing pressure on the European Central Bank to start tightening monetary policy at its next announcement on Thursday.
Consumer prices rose just 1.3 per cent in June, down from 1.4 per cent in May. Meanwhile, core inflation, which strips out the effects of volatile energy and food costs, rose by 1.1 per cent, below its April high of 1.2 per cent.
The stubborn refusal of inflationary pressure to pick up towards the ECB’s two per cent target, despite the continued fall in unemployment in the Eurozone, has made the central bank wary of raising tightening conditions either by stopping quantitative easing (QE) or raising its key interest rates. Speculation has mounted since the ECB’s last meeting in June that the central bank might be readying markets for tighter policy at its 12:45pm announcement on Thursday.
Monday kicked off a first full round of Brexit negotiations between the UK and EU. From the discussions, it seemed that the British cabinet ministers were unable to reach an agreement on the best course of actions and the government also seemed at war with itself over the divorce terms.
Media coverage was rife with reports of infighting, echoing the Leave-Remain rifts that May's Conservative party suffered during the EU referendum. Her spokesman said she would tell ministers not to reveal cabinet discussions. May will remind her cabinet that top level government discussions must remain private, her spokesman said on Monday, responding to a series of reported leaks after recent meetings.
May's grip on control of her cabinet, which is divided over Brexit, has been severely weakened by last month's election result when May lost her parliamentary majority, reopening the debate about the nature of Britain's EU exit.
Finance minister Philip Hammond, who has championed a softer form of Brexit, bore the brunt of a series of critical newspaper stories over the weekend about what was said at private government meetings. He said he was being attacked because of his views on Brexit.
09:30 - GBP - UK Inflation expected to remain unchanged at 2.9%
14:30 - GBP - BoE Governor Mark Carney Speaks