Inflation in the EU falls and almost reaches the objectives of the ECB, which remains to watch
Inflation in the euro zone reached 2.6% year-on-year in February, following 2.8% in January, according to final data released by Eurostat on Monday . Within a month, however, consumer price inflation rebounded. This will undoubtedly encourage the European Central Bank to remain cautious.
Inflation in the Eurozone slowed in February on an annual basis, in line with the first estimate, final data published by Eurostat on Monday showed. Over one year, the European Standard Consumer Price Index (HICP) stood at 2.6%, as indicated in the Reuters flash estimate and consensus. As a reminder, it was up 2.8% in January.
However, month-on-month inflation in the 20 countries that have adopted the single currency rebounded by 0.6%, also in line with consensus. Excluding energy and unprocessed food, inflation in January was +0.6% in monthly terms and 3.3% in annual terms.
See also
Price inflation slows slightly in February: “disinflation is confirmed”, according to INSEE
The ECB to the test of facts, or of its own indecision
Will this downward trend be enough to convince the European Central Bank to ease its monetary policy? So far, the ECB has remained very cautious. On March 7, the Frankfurt institution decided to keep the deposit rate at 4%. The goal: to continue fighting inflation, which he sees as still high, even if it is approaching the 2% target.
Christine Lagarde said: “We are making good progress towards our inflation target,” but “we are not sufficiently confident” that we will reach the long-term goal. in the meantime it is certainly achieving its objective of ballasting the European economy and sending growth in the euro area to zero or below.
We will know “much more in June,” he added, while many analysts are counting on mid-year for future rate cuts. Of course, if the fall in inflation were faster than expected, the Central Bank would be faced with a dilemma. 2% is forecast by the ECB in 2025, but its forecasts are not always precise
The feeling is that, as has always been the case in the last three years, the ECB is not able to make autonomous decisions and relies on the monetary policy indications of the Federal Reserve, regardless of the fact that the economic conditions on the two sides of the Atlantic are profoundly different. Who knows, maybe one day we will have an economic policy in Europe that is truly capable of supporting stable growth. A future, perhaps, not now.
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The article Inflation in the EU falls and almost reaches the ECB's targets, which remains to be seen comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/linflazione-nella-ue-cala-e-quasi-raggiunge-gli-obiettivi-della-bce-che-resta-a-guardare/ on Mon, 18 Mar 2024 16:30:51 +0000.