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Unexpected drop in Eurozone inflation

In the Eurozone, inflation has decreased more than expected, now measured at 2.4% in March, a 0.2 percentage point decrease from February. The decrease beats the anticipated 2.5% rate. Core inflation, excluding energy and raw materials prices, also fell from 3.1% to 2.9%. With this progress, the European Central Bank’s (ECB) goal of around 2% inflation seems within reach, possibly leading to interest rate reductions. Danske Bank’s chief analyst, Bjørn Tangaa Sillemann, suggests a strategy of incrementally lowering rates while maintaining a tight monetary policy is plausible. He forecasts a potential rate cut as soon as June, if current trends persist without major disruptions. Homeowners with variable-rate loans could benefit, with potential monthly savings of 135 DKK per million borrowed beginning in July, and a further 170 DKK reduction by January 2025, according to Sydbank senior economist Mathias Dollerup Sprogel. The ECB’s next interest rate meeting is scheduled for the following Thursday.