Eurozone inflation has fallen for the first time in four months to 2.4 per cent, underpinning European Central Bank rate-setters’ hopes that the recent uptick in price pressures is proving temporary.
The February figure, down slightly from the 2.5 per cent rise in prices recorded for the year to January, was slightly worse than economists’ expectations of a fall to 2.3 per cent, according to a Reuters poll.
Core inflation, a measure that excludes changes in food and energy prices, was down to 2.6 per cent in February, from 2.7 per cent the previous month. Services inflation, viewed as a core gauge for domestic price pressures, also fell from 3.9 per cent to 3.7 per cent — the lowest level since April 2024.
The euro, which had already been strengthening on the day, was up 0.6 per cent at $1.044.
The ECB is set to meet later this week, with rate-setters expected to cut the benchmark deposit rate by a quarter-point to 2.5 per cent.
The central bank targets inflation of 2 per cent.
While investors still expect two additional rate cuts by the end of the year, some are bracing for a temporary pause in April after hawkish rate-setters warned that the central bank should not “sleepwalk” into too many cuts.
Executive board member Isabel Schnabel said last month that inflation risks were increasingly becoming “skewed to the upside”, while borrowing costs had eased a lot. Schnabel told the Financial Times that the central bank should “now” start to debate a “pause or halt” to rate cuts.