By Ed Frankl
Inflation in the eurozone ticked down in January, albeit by less than expected, potentially dashing some hopes that the European Central Bank could soon start cutting interest rates.
The bloc’s consumer price index–a measure of the cost of goods and services–rose 2.8% on year, down from 2.9% in December, according to preliminary data published by the European Union’s statistics agency Eurostat on Thursday.
The rate was a little higher than economists expected in a poll by The Wall Street Journal, which saw prices rising by 2.7% on year.
Meanwhile, core inflation–which removes volatile energy, food, alcohol and tobacco prices and reflects underlying inflationary trends–dropped only marginally to 3.3% from 3.4% in December. That reading was again just above the consensus of 3.2%.
Steadily cooling inflation has led some to view that the ECB could be gearing up to start cutting interest rates, but January’s higher-than-expected reading, which remains well above the ECB’s 2% target, alongside still stubborn wage growth in the bloc, could pour cold water on some expectations.
Money markets ahead of the inflation print were pricing in a first rate cut in April, though ECB President Christine Lagarde cautioned at a press conference following last week’s monetary-policy meeting that it was still premature for policymakers to be discussing cuts.
Write to Ed Frankl at [email protected]
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