- Inflation in the euro zone fell slightly to 8.5% in February, even as the ECB signaled that the cycle of interest rate hikes might not be over.
- Core inflation reached around 5.6% in February, compared to 5.3% in January.
- Goldman Sachs said earlier this week that they were raising rate hike expectations for the ECB.
All eyes are on the latest inflation figures outside the euro zone as market participants ponder what the ECB will do next.
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Eurozone inflation eased slightly in February, following comments from the head of the European Central Bank that lowering rates will take time.
Headline inflation in the 20-member bloc stood at 8.5% in February, according to preliminary data released Thursday. This indicates that prices are not falling at the pace seen in recent months. Headline inflation rose to 10.6% in October, but reached a revised rate of 8.6% in January.
Analysts polled by The Wall Street Journal expected inflation to be below 8.2% in February.
Food prices rose month on month, offsetting lower energy costs.
Core inflation rose to around 5.6% in February from 5.3% in January.
In recent days, market participants have wondered whether the ECB will have to maintain its hawkish stance for longer, following higher-than-expected February inflation figures in France, Germany and Spain.
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Euro against the US dollar since the beginning of the year
ECB President Christine Lagarde said on Thursday that bringing inflation down will still take time, according to comments reported by Reuters. The bank is aiming for an overall rate of 2%.
The Frankfurt-based institution said another 50 basis point hike is expected when the central bank adjourns later this month. In comments reported by Reuters, Lagarde said on Thursday the move is still on that table as inflation remains well above target.
Goldman Sachs analysts said earlier this week they were raising rate hike expectations for the ECB and forecast another 50 basis point hike in May.
European bond yields have hit multi-year highs in recent days amid considerations that hawkish monetary policy is here to stay.