European inflation declines to 2.4 percent in March, ECB proceeds cautiously on interest rates
(MENAFN) In March, inflation in Europe saw a more significant decline than anticipated, dropping to 2.4 percent. This decrease was attributed to easing grocery price increases and a general downtrend in the consumer price index across Europe's largest economies, namely Germany and France. The annual inflation rate for the 20 countries using the euro currency came in below the 2.5 percent rate that financial markets had predicted. This brings the European Central bank (ECB) closer to its target inflation rate of 2 percent than ever before.
Despite this welcomed decline from February's 2.6 percent, analysts caution that it may not be sufficient to prompt the ECB to implement its first interest rate cut. While the central bank is scheduled to meet on April 11, expectations for an interest rate cut are not high, with many forecasting that it will likely occur in June. This hesitance to adjust interest rates stems from concerns over the sluggish economic growth across the eurozone.
The European Central Bank, headquartered in Frankfurt, has maintained steady interest rates since October 2023. This decision followed a concerted effort to raise interest rates as a measure to combat escalating inflation. Despite persistent economic challenges and the need for stimulus measures to spur growth, the ECB has opted to maintain its current monetary policy stance. As the central bank navigates the delicate balance between addressing inflationary pressures and supporting economic recovery, market observers closely monitor developments in anticipation of any policy adjustments in the coming months.
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