Euro zone inflation unexpectedly slows to 2.4% in March, with core print also below forecast

**Easing Inflation Fuels Anticipation of Interest Rate Cuts in the Eurozone** Inflation within the 20 countries that comprise the eurozone has shown signs of deceleration, falling to 2.4% in March.

This dip has heightened expectations that the European Central Bank (ECB) will initiate interest rate cuts in the near future, potentially starting in June.

Initially, economists predicted that inflation would remain steady at 2.6%.

However, excluding key sectors such as energy, food, alcohol, and tobacco, the core inflation rate also declined from 3.1% to 2.9%.

Despite this overall easing, services inflation remains stubbornly high at 4%, indicating continued pressure from wage increases.

The ECB closely monitors services inflation as a gauge of economic health.

Markets and analysts anticipate that the ECB will lower interest rates in June.

This expectation is supported by the recent statements of ECB decision-makers.

Strong signals of a rate cut come from Austria’s central bank head, Robert Holzmann, who had previously suggested that no cuts would occur in 2024.

Another indicator, the eurozone unemployment rate, remained stable at 6.5% in February.

However, it has improved from 6.6% in February 2023.

Positive signs of inflation reduction have been observed in France and Spain, while Germany’s inflation rate has reached its lowest point in three years at 2.2%.

Economist Kamil Kovar believes that the March inflation data has dispelled fears about the final stages of inflation resistance and expects five rate cuts within this year.

Kovar emphasizes that despite some unfavorable details, such as high services inflation and falling food prices, overall inflation is on track to drop below 2% during the summer.