Germany experienced a decrease in overall inflation in September, as reported by regional data from Jinshi, although core inflation and service sector inflation remained constant. Following the release, the euro’s value increased.

Franziska Palmas, an economist at Capital Economics, observed that despite the overall inflation decline, the expected reduction in service sector inflation—a key indicator monitored by the European Central Bank—has been minimal. Palmas partly attributed the stability to the diminishing impact of the Paris Olympics on pricing pressures.

However, Palmas cautioned that market expectations for an October rate cut, currently estimated at a 93% probability, might be excessively optimistic due to the continued firmness in core inflation and the service sector.