Euro zone inflation March 2024

Euro zone inflation March 2024

Two women hold an umbrella while sitting at an outdoor table of a cafe on April 1, 2024 in Rome, Italy.

Emanuele Cremaschi | Getty Images News | Getty Images

Inflation in the 20-nation euro zone fell to 2.4% in March, according to flash figures released on Wednesday, raising expectations for interest rate cuts in the summer.

Economists polled by Reuters had expected the rate to remain stable at 2.6% from the previous month.

The core rate, excluding energy, food, alcohol and tobacco, fell from 3.1% to 2.9%, also falling short of expectations.

However, inflation in the services sector – a key monitor for the European Central Bank – remained at 4% for the fifth straight month, indicating continued pressure from wage growth.

Price increases in France and Spain last week were lower than forecast. On Tuesday, headline inflation in the bloc’s largest economy, Germany, was estimated at its lowest level in three years at 2.2%.

Another ECB indicator released on Wednesday, the euro area unemployment rate, was 6.5% in February, stable compared to January but below the 6.6% in February 2023.

Markets expect the central bank to begin cutting interest rates in June – a position reflected in recent communications from ECB policymakers. Their next monetary policy meeting is scheduled for April 11.

“The current narrative clearly points to a first rate cut in June, as a whole host of key data will be available at that meeting: a new round of ECB forecasts, GDP growth and wage growth data for the first quarter of 2024,” the bank’s results Lending Survey, to name just the most relevant ones,” Carsten Brzeski, global head of macro at ING, said in a statement on Wednesday.

“We expect the ECB to remain on hold next week and continue to prepare markets for a first rate cut in June.”

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2024-04-03 09:27:37