Eurozone inflation will not prevent ECB easing
|Eurozone inflation may have exceeded expectations, but it has slowed from the previous month, allowing the European Central Bank (ECB) to consider cutting its key interest rate later this week, though a more cautious approach may be required moving forward.
The headline CPI declined to 2.4%, down from a peak of 2.5%, yet remains well above September's 1.7% year-on-year rate. Over the past 17 months, inflation has held steady around 2.4%, surpassing the target of "around 1.8%".
Meanwhile, the core price index, excluding volatile goods, has dipped to 2.6%, marking its lowest level since early 2022 but still significantly higher than the stable inflation observed until mid-2021.
Despite these figures, the ECB has already slashed its key rate by 160 basis points since last September. Following today's report, another quarter-point cut is expected on Thursday, which mitigates the risk of sudden inflation spikes.
Earlier in the week, the euro strengthened due to robust inflation data and improved European PMI readings for late February. For the ECB, stabilizing and potential appreciation of the euro could influence further easing measures. With weak domestic demand in Europe posing minimal inflationary threats, the economy has responded positively to monetary easing and euro depreciation observed since late 2024.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.