Eurozone inflation expectations rise, euro edges lower

[Redator]

The euro is showing little movement on Wednesday. In the North American session, EUR/USD is trading at 1.1303, down 0.23% on the day.

Eurozone near-term inflation expectations rise

Eurozone consumer inflation expectations rose in April to 3.1% over the next year, up from 2.9% in March. Inflation expectations for three and five years were unchanged, at 2.5% and 2.1%, respectively.

Inflation expectations are carefully monitored by the European Central Bank as expectations that inflation will accelerate can manifest into higher inflation. Still, the reading is not expected to change any minds at the ECB, which is widely expected to lower rates by a quarter-point next week.

The ECB has been aggressive in its easing cycle, chopping rates by 225 points since last June and lowering the deposit rate to 2.25%. The ECB is expected to trim rates by a quarter-point at next week's meeting, based on projections that inflation is expected to ease due to a weak economic growth, lower energy costs and weak wage growth.

Federal Reserve minutes likely to stress "wait-and-see" stance

The Federal Reserve will release the minutes of its May 7 meeting later today. At the meeting, the Fed signaled that it wasn't planning to lower rates anytime soon and the minutes are expected to confirm the Fed's wait-and-see stance. US President Trump has been zig-zagging on trade policy, imposing and then cancelling tariffs on China and the European Union. Fed Chair Powell said at the May meeting that the economic uncertainty due to tariffs means that the appropriate rate path is unclear and that message could be reiterated in the Fed minutes.

US President Trump's erratic trade policy was on full display over the weekend. On Friday, Trump threatened a 50% tariff on all European Union goods effective June 1, but reversed that decision two days later, saying the tariffs would be delayed until July 9. Trump's unpredictability has made it difficult for ECB policymakers to make growth and inflation forecasts due to the economic uncertainty.

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