Eurozone News
LAST UPDATE: June 27, 2025
ECB on path to meet its 2% inflation target, ECB’s De Guindos Says
ECB Vice‑President Luis de Guindos affirmed that eurozone inflation has declined to 1.9% and is on track to meet the 2% target. After eight rate cuts this cycle, the ECB plans a pause in July pending clarity on US trade tensions.
Insight
De Guindos’s remarks suggest confidence in reaching the inflation goal without further aggressive easing. But the pause reflects caution given global uncertainties, signaling conditional patience rather than premature optimism.
ECB should change inflation target, researchers to tell policymakers
A study to be presented at the ECB forum advocates revising the inflation target to focus on discretionary goods/services inflation rather than headline CPI. This could better cushion low-income households from shocks without major growth trade-offs. Although viewed favorably by some experts, ECB officials remain committed to the 2% headline goal.
Insight
The proposal highlights distributional concerns in monetary policy: targeting discretionary inflation might reduce burden on vulnerable groups. But shifting targets could complicate credibility and communication. ECB appears cautious, preferring status quo.
ECB beat inflation without heavy economic costs, says departing hawk
Klaas Knot, departing head of the Dutch central bank, noted that ECB’s aggressive tightening (rates from –0.5% to 4%) slowed inflation from ~11% with less economic harm than feared—economy grew 2.6%, unemployment stayed low. Since mid‑2024, rates have been lowered to 2%, though “balanced” policy decisions hinge on global events.
Insight
Knot’s retrospective supports the ECB’s cautious easing cycle: strong action helped control inflation without recession. Still, the ECB may remain data‑dependent, especially given trade headwinds and energy volatility.
Inflation in France, Spain Ticks Higher for First Time in 2025
Reuters
In June 2025, consumer prices rose by 0.8% in France—up from 0.6% in May—and 2.2% in Spain, marking the first increase this year for both. Spain’s rise was fueled by food and fuel prices, while France saw a faster climb in services. (reuters.com)
Insight
The uptick suggests renewed inflationary pressure in the eurozone, driven by energy and services costs, challenging the ECB’s recent easing path and indicating that balance may be fragile.
Renters struggle to survive in Portugal housing crisis
AFP
In Lisbon, rental costs have soared—up 124% since 2015—compelling pensioners like Antonio and municipal workers like Carlos to live in abandoned homes or shipping containers. The government plans ~60k social homes, but critics warn supply alone won’t fix the problem.
Insight
Portugal’s housing crisis exposes deep structural issues: foreign investor inflow, insufficient regulation, and limited public housing. Even with new construction, critics argue policy gaps remain—rent control and stronger tenant protections are needed.
Ireland’s Firms Brace for Economic Hit With Quiet Confidence
Irish financial firms and policymakers voiced cautious confidence ahead of potential impacts from global trade tensions. With strong regulation, fiscal surpluses, and a business-friendly environment, they believe their economy can weather shocks. Growth projections are slightly down to ~2% for 2025.
Insight
Ireland’s resilience stems from its robust financial framework and reliance on U.S. multinationals. The challenge will be to diversify growth to reduce dependency on foreign tax revenue and guard against external shocks.
