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Hot Eurozone inflation numbers highlight the challenge for Lagarde

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Today’s Eurozone inflation numbers highlight the tough task that ECB President Christine Lagarde faces in getting prices under control.

Yesterday’s 75 basis point hike was expect but the statement removed a reference to ‘several’ meetings of hikes and that sparked speculation that December could be close to the end of the cycle. The terminal rate is now priced close to 2.75%, which isn’t terribly restrictive.

Contrast that with today’s Italian CPI number at 4.0% m/m compared to 1.4% expected. That pushes the EU-harmonized y/y rate to 12.8% from 9.9% expected.

In Lagarde’s home country of France today, inflation rose 1.3% m/m compared to 0.6% expected with tye y/y number rising 6.2% and plenty more in the pipeline.

A lone bright spot so far is Spain where prices rose 7.3% y/y compared to 8.0% expected but we’re still waiting on Germany. So far the regional numbers have been hot and point to a national number around 0.7% compared to 0.5% expected. We’ll get the data at the top of the hour.