Switzerland’s CPI reported a negative outcome, aligning with predictions, while the core reading decreased to 0.5% from 0.6%. This hasn’t altered market expectations, which anticipate a 55 bps easing by year-end, with a 34% likelihood of a 50 bps cut at the SNB’s next meeting.

In the Eurozone, CPI figures fell below expectations, with core inflation dropping to 2.3% from 2.7% and services inflation to 3.2% from 4.0%. The market outlook remains unaffected as a 25 bps cut from the ECB is anticipated this week, with more possible by year-end.

Central Bank Leaders

Central bank leaders spoke during the session but offered no new forward guidance. BoJ’s Ueda stated rate increases depend on meeting specific inflation and trade conditions. BoE representatives predict a continued disinflationary trend and suggest rates will fall due to growth risks not fully represented in GDP figures.

Attention in the US session turns to Job Openings data, with expectations of a decline to 7.100M from 7.192M. This is unlikely to influence markets significantly, given more current insights expected from upcoming Jobless Claims and NFP reports.

The figures released earlier this week underline a general pattern that has been building quietly but persistently: inflation across several developed economies is drifting lower, and monetary authorities are watching it without flinching. In Switzerland, the downward move in both headline and core inflation readings mirrors prior estimates, and the pricing in money markets implies traders continue to suspect the same general direction—a steady path towards easing. The consensus expectation for a total of 55 basis points in rate reductions by year’s end is holding firm, which indicates that participants are giving more weight to broader disinflationary signals rather than month-to-month volatility.

In the Euro area, the CPI surprises have tilted in favour of those betting on accelerated monetary loosening. The fall in services inflation, in particular, is worth keeping an eye on. That metric has often been used as a proxy for longer-term inflation pressures, especially since it’s less sensitive to energy shocks or seasonal swings. The drop from 4.0% to 3.2% suggests that wage pressures and internal demand are not proving sticky, contrary to what many had feared just a few months ago. June’s expected rate cut, in this context, looks more like a starting move than a standalone event. That’s also been reflected in swap markets, where additional cuts are being priced in for the back-half of the year.

Policy Outlook

BoJ’s Ueda remained cautious in tone, but the underlying message hasn’t changed: policymakers there are comfortable waiting for the data to give them firm direction, particularly when it comes to wage dynamics and external demand shifts. His comments were in line with past remarks, and nobody reading them would have walked away expecting anything imminent in terms of action. Over in the UK, the statements from Monetary Policy Committee members were less cryptic. They reiterated that weakening domestic output and cracks beneath the headline GDP readings are becoming harder to ignore. Based on what’s been said, there’s a clear sense that rates are too high for current conditions and will likely need trimming. This assessment doesn’t rely on GDP alone—it stems from other metrics like demand indicators and inflation expectations, both of which have softened over recent months.

Now looking to the United States, the upcoming job openings data will round off the labour market picture, but market watchers don’t expect much in the way of price action from that release alone. The number has already been on a gentle downward slope in recent reports. More weight is being given to the later jobless claims and employment data. Those tend to carry more forward-looking value. If jobs growth continues to inch lower—or simply fails to reaccelerate—it will influence front-end pricing much more directly.

Traders who focus on volatility and directional exposure from rate path decisions should pay closer attention not to the headlines but to the broader tone in central bank remarks, especially where growth is concerned. Inflation is clearly weakening across the board, but it’s the acknowledgement of growth fatigue that will push monetary easing from being merely expected to being urgently delivered. That change in sentiment matters more than one month of data and often arrives quietly. Positioning ahead of central bank meetings should reflect this shift. In our view, the relative passivity in recent sessions suggests many are still positioned for a slower pace of accommodation than the data risk suggests prudent.

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