The latest data on inflation in the euro area are at least somewhat encouraging. Spain’s head of the central bank, Pablo Hernandez de Cos, believes that inflation in the eurozone may fall faster than previously thought. Nevertheless, caution is still advised.
“The overall situation still requires caution,” said the Cos. The indications so far are very preliminary. There are several areas that need to be closely monitored, such as the labor market and wage developments.
In this context, the currency watchdog also mentioned the possible effects of reopening the Chinese economy after the lifting of the strict corona measures and the effects of the ECB’s interest rate hikes so far: “All this in the context of the overall projections made in the leading up to our meeting in March to be evaluated.”
Before the next interest rate meeting on March 16, the monetary watchdogs will get new economic and inflation forecasts from their central bank economists. These will likely be an important factor in their decisions.
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Inflation in the eurozone fell to 8.5 percent in January, after 9.2 percent in December, thanks to a slowing rise in energy prices. Inflation has therefore weakened for the third month in a row. However, core inflation, excluding the volatile prices of energy, food, alcohol and tobacco, recently remained at 5.2 percent.
Since July 2022, interest rates have been raised five times
The ECB has already raised interest rates five times in quick succession since July 2022 in the fight against high inflation. Meanwhile, monetary authorities are discussing the extent to which rates should be increased given the recent fall in inflation rates.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
