Eurozone: Inflation at 2%, expectations of unchanged interest rates gain momentum
7 JAN, 2026
By Joanna Piwko from RankiaPro Europe
“In December, inflation in the Eurozone fell to 2%, aligning with the ECB’s target for the first time since last summer,” says Richard Flax, Chief Investment Officer at Moneyfarm. The data, which met market expectations, “strengthens the hypothesis of unchanged interest rates,” he notes.
“At present, the European economy is showing signs of resilience”, adds Flax, and “GDP growth estimates for 2026 have been slightly revised upwards, from 1% to 1.2%”, supporting a cautiously optimistic outlook.
However, “some risks remain linked to the geopolitical context”, Flax warns, particularly “on the energy front, in light of the current situation in Venezuela”, which could still influence inflation trends and economic confidence.
“For now, the ECB appears oriented towards a wait-and-see approach”, Flax concludes, as the central bank continues to closely monitor macroeconomic data and geopolitical developments before adjusting its monetary policy stance.
