Eurozone News
LAST UPDATE: September 13, 2025
ECB Officials Diverge on Rates as Villeroy Says Cut Is Possible
French ECB official Francois Villeroy de Galhau said another rate cut “can’t be ruled out,” while other ECB officials stressed uncertainty and no immediate need for more easing.
Insight
Divergence among ECB members shows policy uncertainty, with some open to easing if data weakens while others prefer caution, making future decisions highly data-dependent.
ECB’s Kazaks flags ‘rich’ December meeting, carbon-price risk
ECB policymaker Martins Kazaks said the December meeting will be key due to fresh projections, and warned that delays in ETS2 carbon pricing, a stronger euro, and imports from China could alter inflation risks.
Insight
December’s meeting may be pivotal, with structural energy policy factors and currency shifts influencing inflation, leaving October’s decision less decisive.
ECB must be mindful of downside risks to inflation, Rehn says
Finnish central bank governor Olli Rehn stressed downside inflation risks from cheaper energy and a stronger euro, urging caution in policy.
Insight
With inflation risks tilted downward, the ECB may prefer to hold rates longer to prevent undershooting its target.
Merz faces early election test in Germany’s most populous state
Friedrich Merz of the CDU faces an early political test in local elections in North Rhine-Westphalia. Support for the far-right AfD has climbed to around 16%, roughly double its level five years ago, though the CDU leads with about 35%.
Insight
This election is a barometer of Merz’s early leadership and of AfD’s ability to break into regions where it was previously weak. Even without winning, AfD’s surge could complicate coalition politics and push policy debates to the right.
German inflation confirmed at 2.1% in August
German harmonised inflation (HICP) for August 2025 was confirmed at 2.1% year-on-year, up from 1.8% in July, matching earlier estimates.
Insight
Inflation moving back above 2% reduces the case for immediate ECB rate cuts and could pressure households if wages lag, fueling discontent with Merz’s new government.
French inflation eases to 0.8% in August
France’s EU-harmonised inflation slowed to 0.8% in August from 0.9% in July. Service price growth moderated, while manufactured goods prices fell slightly, though clothing and footwear still rose.
Insight
The cooling inflation eases pressure on consumers and strengthens the case for ECB policy patience or even cuts, though structural service inflation remains a concern.
Spain’s 12-month EU-harmonised inflation confirmed at 2.7% in August
Spain’s EU-harmonised inflation was confirmed at 2.7% in August, unchanged from July. Core inflation edged up from 2.3% to 2.4%.
Insight
Stable headline inflation signals persistent price pressures, meaning Spain is not pulling eurozone inflation lower. This supports ECB caution in shifting policy.
ECB Officials Diverge on Rates as Villeroy Says Cut Is Possible
ECB policymakers are divided on rate direction. Banque de France governor François Villeroy said a cut cannot be ruled out, while others argue for caution until more data is available. The December meeting is expected to be pivotal.
Insight
The split reflects uncertainty over inflation and growth. Villeroy’s openness to cuts could shape market expectations, but consensus at the ECB remains fragile.
Next ECB rate decisions open, will depend on data, Kocher says
Austrian central bank chief Martin Kocher said the ECB’s next rate decisions remain open and will be data-driven, stressing flexibility at each meeting.
Insight
His comments highlight ECB’s commitment to “meeting-by-meeting” decisions, signaling no preset path and keeping markets guessing on the timing of cuts.
ECB’s Kazaks flags ‘rich’ December meeting, carbon-price risk
ECB policymaker Martins Kazaks said the December meeting will be “rich” with data and decisions. He warned that delays in carbon pricing schemes could affect inflation forecasts, along with exchange rates and external demand.
Insight
His remarks underscore how energy, climate policy, and global trade remain key inflation risks. December could bring significant ECB policy adjustments.
ECB must be mindful of downside risks to inflation, Rehn says
Finnish central bank chief Olli Rehn warned of downside risks to inflation from lower energy prices and euro appreciation, urging the ECB to remain alert to weaker-than-expected price trends.
Insight
Rehn’s comments tilt toward policy easing, reinforcing the case for caution against overtightening. His stance adds weight to doves in the ECB debate.
Merz faces early election test in Germany’s most populous state
Friedrich Merz and his party face a test in state elections in North Rhine-Westphalia. The far-right AfD has increased its support to about 16%, roughly double compared to five years ago; CDU is polling around 35%.
Insight
This election is an early measure of how strong AfD has become even in regions where it was weak; it has implications for coalition building and political positioning to the right.
German inflation confirmed at 2.1% in August
German EU-harmonised inflation (HICP) for August 2025 was confirmed at 2.1% year-on-year, up from 1.8% in July.
Insight
Inflation rising above 2% could reduce pressure to cut interest rates quickly, and may strain households if wage growth does not keep pace.
French inflation eases to 0.8% in August
France’s harmonised inflation dropped to 0.8% in August from 0.9% in July, partly due to moderating service price growth.
Insight
The slowdown gives relief to consumers and might help ease inflationary pressure; it also influences ECB’s policy expectations.
Spain’s 12-month EU-harmonised inflation confirmed at 2.7% in August
Spain’s EU-harmonised inflation for August 2025 held at 2.7%, same as July; core inflation ticked up from ~2.3% to ~2.4%.
Insight
Stable inflation suggests persistent upward price pressures; it may limit how aggressively the ECB can ease.
