Subscribe Login

Eurozone Inflation Falling Quicker Than Previously Thought

By Reuters
Eurozone Inflation Falling Quicker Than Previously Thought

Eurozone inflation could fall faster than expected in 2024 as economic growth will remain anaemic, results from a number of surveys and indicators showed on Friday.

A key European Central Bank (ECB) survey now sees inflation at 2.4% this year, down from 2.7% three months ago. This is below the rate projected by ECB staff, also 2.7%.

These predictions bolstered bets for an early start to ECB interest rate cuts.

However, the ECB kept interest rates unchanged on Thursday. It insisted that even a discussion about rate cuts was premature because prices pressures have yet to be fully extinguished.

‘Not Linear’

However, fresh figures show inflation is cooling quickly, growth is not as strong as it should be, and lending growth is at best bottoming out after an exceptionally weak 2023.


Gediminas Simkus, a member of the ECB governing council said, “The further we go into 2024, the greater the chance of a rate cut.”

Simkus called a rate cut a near certainty, but that March was too early a date for that eventuality, saying, “The increase in the odds is exponential, not linear.”

This downgrade in the inflation outlook was consistent with the findings of a separate survey of the ECB's contacts with corporations and matches views held by many market economists.


Many economists argue that the ECB is overly pessimistic about inflation.

They cited weak growth, moderating commodity prices, lower than feared wage growth and the impact of past rate hikes as pointing to price growth falling back to the ECB's 2% target sooner than its 2025 projection.


Firms said they expected the jobs market to soften given prolonged uncertainty and an increasing need to contain costs.

Over the longer term, defined as 2028, the forecasters' survey sees price growth at 2.0%, down from a previous forecast at 2.1%.

Stay Connected With Our Weekly Newsletter

Processing your request...

Thanks! please check your email to confirm your subscription.