On April 23, 2024, people walked on the streets of the Montmartre district of Paris, France.
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Euro zone price growth held steady at 2.4% in April, according to preliminary data released on Tuesday, while the economy returned to growth in the first quarter.
The 2.4% headline inflation rate was in line with forecasts by economists polled by Reuters. On a monthly basis, the inflation rate is 0.6%.
Core inflation, which excludes energy, food, alcohol and tobacco, fell to 2.7% from 2.9% in March. The impact of the annual decrease in energy prices continued to weaken, falling to -0.6% in March, compared with -1.8% in March.
At the same time, gross domestic product grew 0.3% in the first three months of this year, slightly better than economists’ consensus expectations.. GDP in the fourth quarter of 2023 was revised from no growth to a contraction of 0.1%, which means that the euro zone fell into a technical recession in the second half of last year.
Market expectations are growing that the European Central Bank will start cutting interest rates at its next monetary policy meeting on June 6. According to LSEG data, the probability of reduction in June is 70% The stakes are even higher for a rate cut in July or September.
Many voting ECB members told CNBC earlier this month that they expected a rate cut in June, citing the need to prevent an excessive slowdown in the euro zone economy. They also pointed to risks from oil prices and volatility in the Middle East.
BNP Paribas analysts had expected overall interest rates to remain unchanged, mainly due to rising crude oil prices, and this outcome would continue to support a rate cut in June. They said in a report ahead of the latest inflation data that the outlook for interest rates was more uncertain after June.
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