Photo of Judita Grigelytė (VŽ).
Annual inflation in the euro zone slowed down to 2.4% in March. Price growth is slowing more than expected, strengthening expectations for interest rate cuts as early as the summer.
In the Eurozone, consumer prices were 2.4% higher in March than a year ago, while net inflation – which excludes food, energy, alcohol and tobacco prices – fell to 2.9%.
Economists polled by Reuters had expected annual inflation of 2.6%, the same as in February. Net annual inflation reached 3.1% in February.
It is true that the price change in the service sector has been at 4% for the fifth month. It is supported by wage growth.
Such indicators strengthened expectations that the European Central Bank will be able to start reducing the base interest rate in June.
“The current narrative clearly suggests that the first rate cut will take place in June, as this will be the first meeting where all the important data will be known: fresh forecasts from ECB members, data on GDP growth and wage growth in the first quarter of 2024.” quarter and bank lending survey data,” says Carsten Brzeski, Head of Macroeconomic Research at ING Bank in the Netherlands.
Market participants predict three interest rate cuts this year, with a 60% chance of a fourth. In comparison, four rate cuts were expected before the ECB’s last rate decision.
The next ECB meeting is on April 11.
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