The European economy once again encouraged analysts and traders by showing signs of a recovery. However, there are concerns that the upward cycle may stop. In the event of this, all the efforts will be in vain.
According to a Reuters poll, inflationary pressure is now mounting in the eurozone. This may affect the ECB's decision to keep the interest rate at the current level.
Notably, eurozone consumer demand increased last month, still remaining below the break-even level. Meanwhile, the producer price index advanced to 54.2 points.
Data on the composite PMI from S&P Global is an indicator of the overall economic situation. In January 2024, it climbed to 47.9 points, showing the best performance since July last year. However, it is still below the 50-point threshold that separates contraction from expansion.
The current state of affairs could hardly favor changes in the ECB’s monetary policy. Economists suppose that, at present, the regulator is not ready to cut the key interest rate because of climbing commodity prices. What is more, services are also becoming pricier. In the given period, business activity in the eurozone services sector, which is the main one for the economy, slid to 48.4 points.
