FRANKFURT, Germany (AP) — Inflation in the 20-nation eurozone crept lower to 2.5% in June, but remained stuck above the level favored by the European Central Bank, which is in no hurry to add more rate cuts after a first tentative reduction in its benchmark rate.
The figure released Tuesday was down from 2.6% in May, welcome news as inflation continues to fall from its peak of 10.6% that robbed consumers of spending power and mired the European economy in months of near-zero growth.
But key indicators Tuesday remained at levels that suggest inflation may remain stuck between 2% and 3% for a while yet. Inflation in services prices ran at 4.1%, unchanged from the month before.
The ECB’s caution in making sure inflation is under control comes as the U.S. Federal Reserve holds off on cutting rates from current highs. The central banks don’t want to belatedly discover that inflation is more stubborn than they thought and reverse course — a mistake that would make inflation harder to wring out of the economy and would ding their credibility into the bargain.
High rates aim to squelch inflation by making it more expensive to borrow money to buy goods or invest in new factory equipment. That relieves pressure on prices — but can also dampen growth. That’s the tightrope the ECB and the Fed are trying to walk: make sure inflation is contained, without pushing their economies into recession.
ECB President Christine Lagarde said in a speech on Monday that the bank needed to first make sure inflation was firmly under control before cutting its key rate again after a first, quarter-point cut at its June 6 meeting to the current 3.75%.
“It will take time for use to gather sufficient data to be certain that the risks of above targe inflation have passed,” Lagarde said in a speech at an ECB conference in Sintra, Portugal. She said that though growth in the eurozone was uncertain, the jobs market remained strong with low unemployment levels. That is a sign that the economy is holding up even with rates much higher than before.
Even so, higher rates have held back credit-sensitive areas such as real estate and construction. Mortgage rates for house purchase have risen, and a yearslong rally in house prices in the eurozone has come to an end. Savers, however, are seeing relief from the earlier period of zero rates that saw some banks paying negative interest on savings — in other words, charging people to keep their money there.
Lagarde has characterized the first rate cut in June as merely “moderating the level of restriction” on the economy and not as the start of a rapid series of cuts. She says decisions will be based on incoming data on a meeting-to-meeting basis.
Analysts say that no cut is likely at the bank’s meeting July 18, meaning the discussion about rates remains focused on the bank’s September meeting.
The European economy has slogged through quarter after quarter of near-zero growth, with a modest upturn of 0.3% in the first three months of this year. Recent indicators such as S&P Global’s purchasing managers’ index indicate that factory activity in the eurozone is contracting.
Europe’s economy slowed after an outbreak of inflation caused by higher energy prices robbed consumers of purchasing power that they are only now regaining through new labor agreements and pay increases. Energy prices soared after Russia cut off most supplies of natural gas over its full-scale invasion of Ukraine, and those higher prices fed through into prices for other goods and then to services, a broad category including everything from medical care and concert tickets to haircuts and restaurant bills.
FILE - President of European Central Bank Christine Lagarde attends a press conference after a meeting of the ECB's governing council in Frankfurt, Germany, Thursday, June 6, 2024. Inflation is on the way down in Europe. That's good news. But not good enough for the European Central Bank to cut interest rates just yet. (AP Photo/Michael Probst, File)
SYDNEY (AP) — Liam Wright will lead the Wallabies against Wales on Saturday after Joe Schmidt completely overhauled Australia’s squad for his first test in charge.
Wright has been captain of the Queensland Reds in Super Rugby since 2020 but has only played five test matches for Australia. He'll be the seventh player to lead the Wallabies in two seasons.
That’s of little concern to Schmidt, who retained in the starting XV just four of the players who started Australia’s last test in a dismal World Cup performance last year.
“Liam ... is really understated,” Schmidt said. “He was identified by the players as a natural leader in the group. He’s a lineout caller, so he already has a responsibility in the team.
“I think what all the coaches liked about Liam is he doesn’t really say that much — he just gets on and gets the job done really well."
When asked if the captaincy was a long-term appointment, Schmidt responded: “At the moment, everything’s pretty short-term, including our preparation."
“For this weekend, it was a discussion around who’s likely to stay on for a long period of time, who already has a responsibility in the team," he said.
Schmidt had a successful tenure as Ireland coach from 2013-19. After a brief return to New Zealand, he moved to Australi a after Eddie Jones quit the job in January. He wants to put his own stamp on the Wallabies.
He selected lock Jeremy Williams and center Josh Flook for their test debuts and picked hooker Matt Faessler in the starting XV for the first time.
Williams will partner in the second row with Lukhan Salakaia-Loto, who is returning from a stint in England with Northampton for his first test since 2021.
Five of the eight reserves are uncapped, including backup flyhalf Tom Lynagh, the son of Wallabies great Michael Lynagh. Another, replacement hooker Billy Pollard, has played one test.
Prop Allan Alaalatoa and scrumhalf Tate McDermott, both selected on the bench, have led the Wallabies during the last 12 months.
Alaalatoa lost his starting spot to the recalled Taniela Tupou, and Jake Gordon was picked to start at No. 9 ahead of McDermott.
Tom Wright, who missed selection for the World Cup squad last year, returns at fullback and Andrew Kellaway will move to the wing. Filipo Daugunu was recalled to start on the other wing.
Schmidt and Wales coach Warren Gatland, both New Zealanders, have a long history as rival coaches heading into this two-test series.
And while Schmidt is determined to get his tenure started with a win, Gatland needs to end a seven-test losing streak, including a loss to world champion South Africa last month at Twickenham.
Wales trounced Australia 40-6 in the group stage of the World Cup in France last year, but hasn't beaten the Wallabies on Australian soil in 11 tests since 1969.
Only three of the starting XV from that win over Australia last September will start again in Sydney.
Gatland unveiled a starting lineup containing a halves combination with a total of three test caps between them: scrumhalf Ellis Bevan coming off his test debut and Ben Thomas starting at No. 10.
Josh Hathaway was selected on the wing to make his test debut, the only uncapped player in the 23-man squad.
Skipper Dewi Lake will start at hooker and Aaron Wainwright will be at No. 8 for his 50th test, making him the most experienced player in the starting forward pack.
“We’ve had a good week of preparations here in Sydney and are excited to get out on field on Saturday,” Gatland said. "This first test is going to be a great challenge for us.
“Test matches are all about fine margins and we know we need to be accurate, keep our discipline and stay in the fight for the full 80 minutes.”
Australia: Tom Wright, Andrew Kellaway, Josh Flook, Hunter Paisami, Filipo Daugunu, Noah Lolesio, Jake Gordon; Rob Valetini, Fraser McReight, Liam Wright (captain), Lukhan Salakaia-Loto, Jeremy Williams, Taniela Tupou, Matt Faessler, James Slipper. Reserves: Billy Pollard, Isaac Kailea, Allan Alaalatoa, Angus Blyth, Charlie Cale, Tate McDermott, Tom Lynagh, Dylan Pietsch.
Wales: Liam Williams, Josh Hathaway, Owen Watkin, Mason Grady, Rio Dyer, Ben Thomas, Ellis Bevan; Aaron Wainwright, Tommy Reffell, Taine Plumtree, Dafydd Jenkins, Christ Tshiunza, Archie Griffin, Dewi Lake, Gareth Thomas. Reserves: Evan Lloyd, Kemsley Mathias, Harri O’Connor, Cory Hill, James Botham, Kieran Hardy, Sam Costelow, Nick Tompkins.
AP rugby: https://apnews.com/hub/rugby
FILE- Wales head coach Warren Gatland before the Six Nations rugby union international match between Wales and France at the Principality Stadium in Cardiff, Wales, Sunday, March 10, 2024. Wales coach Warren Gatland says he had no intention of upsetting hooker Sam Parry, who quit the rugby squad this week for reportedly feeling “disrespected.” (AP Photo/Rui Vieira, File)
FILE - Ireland's coach Joe Schmidt watches as his players warm up ahead of the Rugby World Cup Pool A game at Kobe Misaki Stadium between Ireland and Russia, in Kobe, Japan, on Oct. 3, 2019. Liam Wright will lead the Wallabies against Wales after Joe Schmidt completely overhauled Australia’s squad on Thursday, July 4, 2024 for his first test in charge. (AP Photo/Christophe Ena, File)
