**Economic Growth and Inflation Stability** Rehn highlights the complicated nature of economic challenges in the euro area and the uncertainty around inflation. This situation requires flexibility in economic decision-making. The Governing Council will not stick to a set interest rate plan and will adjust based on the latest data at each meeting. Economic growth in the euro area has remained steady, and inflation has stabilized, but it’s still essential to stay alert. The European Central Bank (ECB) is expected to keep interest rates steady at 2% during its meeting on September 10 and 11, after maintaining rates in July. With the ECB likely to hold the key interest rate at 2% in September, we anticipate that near-term fluctuations in interest rate derivatives will remain low. This environment is more favorable for setting up positions for future moves rather than seeking immediate profits. Traders should pay attention to any shifts in strategy, as the current stability may not continue. Concerns about potential downside risks to inflation are important for market trends. Recent data shows the August inflation flash estimate at 2.1%, slightly below expectations and lower than the previous month. As a result, we observe interest rate swaps for early 2026 starting to reflect a higher chance of a rate cut. **The Euro’s Impact on Inflation** The strengthening euro, now around 1.15 against the dollar, plays a significant role in controlling inflation. However, any indication from the ECB about possible future rate cuts could stop the euro’s rise. Thus, options traders might consider strategies that benefit from the euro trading within a range or potentially weakening in the coming months. This approach of evaluating rates “meeting-by-meeting” marks a clear shift from the predictable rate hikes seen in 2022 and 2023. The growing uncertainty about the ECB’s direction after September suggests that investing in longer-term volatility may be a wise strategy. Without a set route, new economic data will have a greater impact on market expectations. Lower energy prices are also supporting the trend of decreasing inflation, with Brent crude dropping to around $75 a barrel from over $85 earlier this year. This allows the central bank to keep rates steady or even consider easing monetary policy if growth slows down. Such trends make unexpected inflation rises less likely, supporting expectations for lower future rates. Create your live VT Markets account and start trading now.

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