Spanish inflation climbed to more than double the European Central Bank's 2% target in August, while French inflation came in above forecasts for the same month. Both readings landed in the same week, reinforcing market expectations that the ECB will raise its benchmark interest rate at its September meeting.
A September ECB rate hike raises borrowing costs across the eurozone, which puts pressure on European equities, particularly rate-sensitive sectors like real estate and utilities. Bond prices in Europe would fall as yields rise, and the euro may strengthen briefly against the dollar, creating headwinds for European exporters.
September 14: ECB rate decision meeting. September 19: Eurozone August final inflation (HICP) release.
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