On April 1, 2024, Rome, Italy, two women sat at an outdoor table in a cafe, holding umbrellas.
Emanuele Cremaschi | Getty Images News | Getty Images
According to preliminary data released on Wednesday, the inflation rate in the 20 euro zone countries fell back to 2.4% in March, strengthening expectations for interest rate cuts to begin in the summer.
Economists polled by Reuters had forecast interest rates would be unchanged from last month at 2.6%.
Core inflation, which excludes energy, food, alcohol and tobacco, fell to 2.9% from 3.1%, also lower than expected.
However, the service sector inflation rate, which is the main target of the European Central Bank’s observation, remained at 4% for the fifth consecutive month, indicating that pressure on wage growth continues to exist.
Another indicator released by the European Central Bank on Wednesday was that the euro zone unemployment rate was 6.5% in February, the same as in January but lower than the 6.6% in February 2023.
price increased from France and Spain Last week’s data came in below expectations. On Tuesday, headline inflation in the EU’s largest economy Germanyestimated at a three-year low of 2.2%.
Markets expect the Eurozone central bank to start cutting interest rates in June – a stance reflected in recent messages from ECB policymakers. They will next hold a monetary policy meeting on April 11.
“The current narrative is clearly pointing to a first rate cut in June, as the meeting will provide a full suite of important data: a new round of ECB staff forecasts, GDP growth and wage growth data for the first quarter of 2024, and ING Global Head of Macro Carsten Brzeski In a report on Wednesday it said:
“We expect the ECB to remain on hold next week and further prepare markets for a first rate cut in June.”
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