Shortly before interest rate decision: inflation in the euro zone drops of 2 percent under ECB target

Inflation in the euro zone has dropped under the target brand of the European Central Bank (ECB) of 2.0 percent. The rate of inflation in the currency area fell to 1.9 percent in May, the Statistikamt Eurostat in Luxembourg announced with reference to a first estimate. In April the rate was still 2.2 percent.

Inflation in the euro zone has thus sank to the lowest level since September 2024. The decline was stronger than farmers – they had expected 2.0 percent.

The ECB is aiming for an inflation rate of 2.0 percent in the euro area in the medium term. With the decline, the monetary authorities receive further arguments to reduce interest on their interest session this Thursday. It would be the eighth interest rate reduction since summer 2024.

Most recently, the central bank had reduced the key interest rates by 0.25 percentage points in mid -April. The deposit rate relevant to banks and savers is currently 2.25 percent. With falling interest rates, the interest tends to add daily and fixed deposit.

“Last doubts about the key interest rate” cleared “

In May, energy prices in the euro zone fell by 3.6 percent per year. In addition, the increase in service prices, which recently considered inflation drivers, weakened to 3.2 percent.

“Last doubts about a key interest rate of the ECB this week have been cleared,” said KfW bosswirt Dirk Schumacher. “Whether the ECB will reduce the interest rate again depends crucially on how the customs conflict develops with the USA.”

Inflation without the strongly fluctuating prices for energy and food was 2.3 percent, wrote Commerzbank chief host Jörg Krämer. “But it should continue to decrease in the coming months.” In this respect, the ECB will probably not reduce the key interest on Thursday. “We expect another interest step after the summer break.”