Money policy: Shortly before ECB decision: inflation in the euro zone flakes

Shortly before the European Central Bank interest rate decision, inflation in the euro zone weakens. In March, the rate of inflation went back to 2.2 percent after 2.3 percent in the previous month, as the Statistics Office Eurostat in Luxembourg announced according to an initial estimate. It is already the second decline in inflation in a row.

Some economists now expect that the ECB will continue to reduce the key interest rates at its meeting on April 17. The ECB is aiming for an inflation rate of two percent in the medium term and has set interest rates six times since summer 2024. The deposit rate relevant to savers and banks is currently 2.5 percent. In Germany, too, inflation is flapped to a rate of 2.2 percent in March.

“Traffic lights for interest on green”

“With a view to the ECB session in mid-April, an interest rate reduction is more likely than a pause,” commented Commerzbank chief economist Jörg Krämer. Thomas Gitzel, chief economist at VP Bank, wrote, the traffic lights for further interest cuts are on green. However, some experts do not want to rule out a break because there is a lot of uncertainty because of trade conflicts with the United States under Donald Trump.

Cheaper energy presses inflation rate

Among other things, a decline in energy prices was responsible for the somewhat weaker inflation in March. These fell by 0.7 percent in the year. In addition, prices in the service sector no longer rose as much as in the previous months.

The core control in which prices for energy, food and luxury foods are calculated. Here Eurostat reported an annual rate of 2.4 percent after 2.6 percent in the previous month. In the opinion of many economists, core inflation is better than the overall rate and plays an important role in the ECB’s monetary policy.