In its recurring publication "Inflation Monitor," the Bank of Greece forecasts that inflation will slow to 2.5% this year and 2.2% in 2025 before falling below the ECB's 2% threshold in 2027. The Bank of Greece also predicts that the biggest pressures will come from services.

Also, on the path of interest rates, it conveys the assessment of another 25-50 point move by December, but also new moves in 2025.

In particular, on inflation, he notes that consensus forecasts published in August suggest an expected decline in inflation for most advanced countries for 2024-2025 and convergence to 2%.

Annual harmonised inflation in the euro area fell further to 2.2% in August 2024 compared with July (2.6%) and June (2.5%). A significant decrease in energy inflation and a further decline in non-energy industrial goods inflation were the driving forces behind this. Structural inflation (excluding energy and food) fell to 2.8% in August 2024 from 2.9% in July and June. This was also due to a slowdown in non-energy industrial goods inflation, which offset the higher rate of services inflation.

Core CPI inflation came in at 3.2% in August, in contrast to the July reading. Annual nominal HICP-based inflation in Greece accelerated further to 3.2% in August 2024 compared with July (3.0%) and June (2.5%).

This is associated with increases in inflation in the components of unprocessed food, energy and non-energy industrial goods. With a higher rate for the non-energy industrial goods component offsetting a lower inflation rate for services, structural inflation increased to 3.7% in July 2024 from 3.4% in June while remaining unchanged at 3.7% in August.

NEW RATE CUT

The ECB has already cut rates twice in 2024 by a total of 50 basis points, and a third rate cut is expected by December, either by 25 or 50 bps (odds: 48% and 52%, respectively).

The ECB decided at its September meeting to cut the deposit facility rate (DFR), the rate through which it directs monetary policy, by 25 bps to 3.5% from 3.75% previously. It also fixed the interest rate on the main refinancing operations and the interest rate on the marginal lending facility was reduced to 3.65% and 3.90%, respectively.

In fact, ECB President Christine Lagarde, in her regular press conference, stressed that the period until the October meeting is relatively short and that the ECB will remain data-dependent in its rate-setting decisions.