The Eurozone’s Core Harmonized Index of Consumer Prices stayed flat at 0.3% month-on-month in December. This matches previous figures, indicating no change during the month. On a yearly basis, the Core Harmonized Index also showed stability. This consistent rate highlights the current economic conditions in the Eurozone.

Monitoring Inflation Across The Region

This data is part of efforts to track inflation in the region. It looks at key price movements while excluding volatile items such as energy and food. Inflation statistics are important for economic planning and forecasting. The insights gained from these figures help anticipate trends affecting the Eurozone economy. The unchanged index may impact monetary policy decisions. Analysts are carefully studying whether changes are necessary to address economic conditions. Recent data shows that Eurozone core inflation for December 2025 remained stubbornly at 0.3% month-over-month. This translates to an annual rate of over 3.5%, significantly higher than the European Central Bank’s 2% target. This serves as a clear sign that underlying price pressures are not easing as quickly as expected.

Market And Economic Implications

This steady core reading contradicts the market’s recent expectations for interest rate cuts before the summer of 2026. Just last week, data revealed that overnight index swaps indicated nearly a 40% chance of a first cut by June. Traders should reconsider positions based on early or aggressive ECB easing. We anticipate that interest rate futures will adjust in the coming weeks to reflect a more cautious ECB. This means altering expectations for the Euribor and €STR benchmarks later this year. Selling futures contracts for the second quarter of 2026 could be a practical way to prepare for sustained higher rates. This persistence in inflation comes as recent growth indicators, like Germany’s manufacturing PMI of 48.9, point to a slowing economy. This introduces policy uncertainty, evident in a rise in the VSTOXX index, which measures Eurozone equity volatility. We see potential in buying options on bond futures, as the balancing act between addressing inflation and supporting growth may lead to significant market movements. From a currency perspective, a more aggressive ECB compared to other central banks is likely to support the euro. In 2025, widening interest rate differences were a key factor influencing the EUR/USD exchange rate. Therefore, we are considering long euro positions against currencies where inflation is decreasing more rapidly, like the Australian dollar. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now