Eurozone inflation in March accelerated, but the policy of the ECB it will not change

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In March, inflation in the Eurozone has accelerated, returning to levels last seen in December 2017, talking about the latest data by Eurostat. According to published statistics, the consumer price index in the Eurozone in March grew 1.4% yoy, which was in line with market expectations. We will remind that in February, in annual terms, inflation in the Eurozone rose only 1.1%. The base consumer price index in March rose 1% yoy, worse than market expectations (expected growth of 1.1%).
At the same time unemployment in the Eurozone in February dropped from 8.6% in January to 8.5% of the working population, in line with market expectations. Recall that such low unemployment in the Euro zone last recorded in 2008.
Despite the fact that the labour market indicators can to please the ECB, the low inflation yet do not contribute to the tightening of monetary policy. Among the ECB governing there is still no consensus regarding the timing of raising interest rates in the Eurozone. Most likely, while inflation will not reach 2%, the question of raising interest rates in the Eurozone will be postponed.
Moreover, inflation in March rose 1.4%, mainly due to the rising prices of food and energy prices, other commodity groups, the price growth was more modest. Also may change the rhetoric of the leaders of the European Central Bank – from hawkish to a more low-key. However, the market was quite encouraged by the published data, especially on the labor market. The Euro today rose against the dollar by 0.24%.
Natalia Milchakova,
The Deputy Director of analytical Department,