UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Inflation (but not the really exciting sort)'
Feb 27, 2026
A run-through of euro-area flash inflation releases and why headline readings are expected to be stable. A look at why Europe does not face an affordability crisis and how food and electricity prices are behaving. A review of US producer prices and PCE deflator components that matter for Fed debates. Notes on China easing renminbi forward rules and market reactions to a UK by-election result.
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Euro Area Inflation Appears Benign
- European February flash inflation looks stable with little risk of broader inflationary pressure.
- Paul Donovan notes Germany and Spain steady, France up slightly from a very low base, and electricity prices falling across the euro area.
Food And Electricity Are Not Fueling European Inflation
- Food and energy drivers in Europe are not creating price stress for consumers right now.
- Donovan highlights modest food price growth and falling electricity prices, contrasting US consumer experiences.
Producer Prices Feed The Fed's PCE Focus
- US producer price index details matter because they feed into the PCE deflator that the Fed watches.
- Paul Donovan says January PPI will show if company price pass-through is easing, affecting debates over disinflation vs stickiness.