Latest data support the case of the ECB’s doves

Data released this week showed that euro-zone services inflation fell in April for the first time in five months. We think that the continued pass-through of lower energy costs and slower wage growth will mean that it keeps falling over the rest of the year, allowing the ECB to cut interest rates more quickly than is discounted in the market. Next week, we expect the Riksbank to begin its easing cycle with a 25bp rate cut.