Current Market Outlook

Prediction markets are pricing in near-certainty that the Eurozone's annual inflation rate will be at or below the European Central Bank's 2% target in December 2025. The leading Polymarket contract, "Will the Eurozone's annual inflation increase by ≤2.0% in December?" is trading at 95 cents, implying a 95% probability. This indicates traders view a sub-2% print as virtually assured, with only a 5% chance of an upside surprise. It is important to note, however, that trading volume is thin at approximately $4,000, which can amplify price movements and reduce market depth.

Key Factors Driving the Odds

The extreme confidence stems from a sustained disinflationary trend and aggressive monetary policy. The Eurozone's Harmonised Index of Consumer Prices (HICP) has fallen significantly from its 2022 peak above 10%, with recent prints hovering just above 2%. Markets are betting this trajectory will continue, reinforced by the European Central Bank's current restrictive interest rate stance, which is designed to anchor inflation expectations. Furthermore, weakening economic growth indicators across the bloc are seen as reducing underlying price pressures, making a reacceleration back above target unlikely by year-end 2025.

What Could Change These Odds

The primary risk to this consensus is a resurgence in energy or food price shocks, which have previously caused volatile inflation spikes. Geopolitical tensions affecting global supply chains or a sudden shift in the ECB's policy toward earlier or more rapid rate cuts could also alter the inflation path. The market will be highly sensitive to the monthly inflation prints leading up to December 2025, especially any consistent readings above 2.0%. The immediate catalyst is the official Eurostat HICP report for December 2025, which will definitively resolve this market. Given the low liquidity, any surprising economic data in the coming months could cause significant price swings in this contract despite the current high confidence.