Cost of living crisis: Eurozone records record core inflation
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Core inflation in the eurozone reached a record in January, adding confidence to the European Central Bank’s plan to raise interest rates by another half point in March.
It is reported Bloomberg with reference to revised Eurostat data.
The growth rate of core prices reached 5.3%, which is higher than the previous estimate of 5.2%. Headline inflation, which includes food and energy prices, also rose 0.1 percentage point to 8.6% after Germany’s rate came in higher than the agency’s previous estimate.
Such core inflation results will further encourage the ECB to further tighten monetary policy as part of containing fundamental price pressures even as the headline level flattens.
Surveys that testify to the economic stability of the region are also taken into account as grounds for further rate increases.
ECB officials, led by President Christine Lagarde, said at their latest meeting that they intend to raise the deposit rate to 3% from 2.5% at their March 16 meeting.
After tough statements from ECB Executive Board member Isabelle Schnabel last week, markets have increased their expectations for a tightening of monetary policy and are now projecting a peak of the ECB’s rate change cycle at around 3.75%.
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