Key points
- Inflation in the Eurozone slowed to 2.4% in March, a number lower than expected.
- The dip increases the chances of interest cuts later in the year.
20 nation region, the Eurozone just received an economic boost after recording lower inflation rates (2.4%) than expected. The region has been battling harsh economic policies like hiked interest rates to deal with wild inflation since 2023, but now it’s expected that the central bank will reverse this course in June or July.
Eurozone’s economy performs better than expected
Since 2023, the ECB has been hiking interest rates to fight wild inflation rates that almost pushed the Eurozone into a financial breakdown. The inflation rates spiked in the aftermath of the COVID-19 pandemic, saw most governments overstretch their financial abilities to curb the outbreak, and many economies face shutdowns due to health lockdowns.
Throughout 2023, inflation rates worldwide have fallen due to the designated Central Banks imposing higher and higher interest rates. While this has been causing pain in the markets, it was necessary to avoid the occurrence of embedded inflation.
The Eurozone has not been any different. Its economy has been on a similar trajectory; however, it’s now showing signs of fast recovery, which is expected to ease pain in the markets by cutting interest rates. According to information published on Wednesday, the inflation rate in the region fell to 2.4%.
The region’s core inflation rate also fell from 3.1% to 2.9% in March, excluding energy, food, alcohol, and tobacco. Another economic recovery indicator that the ECB released was unemployment data. It fell to 6.5% in February, lower than 6.6% in January. Now, markets expect the Eurozone’s Central Bank to start lowering interest rates in June, a position reflected in a recent message from key figures in the ECB.
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