ECB still likely to cut in September despite mixed data

Today’s release of inflation and activity data for the euro-zone has in our view slightly reduced the chances of a cut from the ECB at its next meeting. However, the bigger picture is that the data released over the past month still suggest to us that a cut in September is the most likely scenario. And given that our policy rate expectations are roughly in line with investors’, we don’t think there’s much scope for Bund yields or the euro to fall much.