Osservatorio | July 2026
Inflation is retreating and interest rates are set to fall, albeit very cautiously.
At a glance:
What remains of the Iran–US truce is the continued navigability of the Strait of Hormuz, leading to a rotation in demand across sectors and countries, as well as lower inflation.
In manufacturing, the reopening of the Strait reduces the need for precautionary inventories and therefore dampens the activity that such demand had generated.
In services, long-haul tourism is picking up again, benefiting in particular a number of European destinations. More broadly, Asia continues to advance as the key supplier of components underpinning the AI revolution, while the United States is slowing due to weaker consumer spending.
The main development is that inflation has already begun to decline in June and is set to fall even further over the summer, supported by subdued household demand, moderate wage growth, margins squeezed by competition, and cautious policymaking.
Central banks have adopted a more hawkish stance, more in rhetoric than in action. This has pushed long-term interest rates higher still, although these are expected to decline as consumer price data improve, helped also by likely discounting activity.
Despite market volatility, the increase in European defence spending continues to support a multi-year growth outlook for the sector.
This document is available in italian only.