Northern Trust Asset Management Monthly Market Commentary – Exclusive Insight for TMI Subscribers
Eurozone Market Update
The European Central Bank (ECB) remains more dovish than other major central banks, with expectations that inflation would move below target towards the second half of the year. There is a balanced view that monetary tightening is not required at this stage. Should inflation be higher than expected, we think they will react. Eurostat’s data showed euro area headline inflation up by 0.1% to 5.0% year-on-year in December, while core inflation was stable at 2.6% year-on-year. The dropping out of the base effect linked to Germany’s value-added tax cut, along with easing supply chain constraints, services reopening, and energy prices normalising have all contributed. Unemployment has declined sharply in recent months, down to 7.2%.