Eurozone inflation eased for the first time in four months, dropping to 2.4% in February. This development has boosted hopes among European Central Bank (ECB) policymakers that the recent inflationary surge may be short-lived.
However, expectations from economists, surveyed by Reuters, had pegged inflation to fall to 2.3%, slightly lower than the actual figure.
Core inflation, which strips out volatile food and energy prices, dipped to 2.6% from January’s 2.7%. Additionally, services inflation, a key domestic price indicator, fell to 3.7%, marking its lowest since April 2024.
The euro responded positively, climbing 0.6% to $1.044 as traders anticipated additional monetary policy actions from the ECB, which is poised to meet later this week.
Another interest rate reduction, the sixth since June’s onset of easing measures, is widely anticipated as the central bank targets returning inflation to the 2% mark.
Investor sentiment points to two more rate cuts before year-end, though some market participants foresee a potential pause in April. This comes amidst concerns from more hawkish ECB members cautioning against excessive rate reductions.
February’s inflation data follows reports from major eurozone economies last week. Germany maintained a high inflation rate of 2.8%, while France recorded a sharp decrease to 0.9%. These figures are standardized across the region to allow for accurate comparisons.
