Eurozone Inflation Rises as Iran Pressures Energy
Eurozone inflation in March was revised higher than initially estimated, reinforcing signs that price pressures from surging energy costs related to the Iran war are beginning to trickle down to the region. Eurostat on Thursday revised annual inflation to 2.6% from 2.5%. Core inflation stood at 2.3%, while services inflation stood at 3.2%.
March's increase was the first this year to put inflation back above the European Central Bank's (ECB) 2% target, as conflicts in the Middle East push up energy costs. The revision follows similar adjustments this week in France, Italy, and Spain, underscoring the broader nature of price pressures across the region.
While markets currently expect two interest rate hikes by 2026, sources familiar with the policy discussions said policymakers are likely to leave rates on hold at their April 29–30 meeting. In its March projections, the ECB forecast average inflation of 2.6% in 2026. ECB President Christine Lagarde and other officials said the economy is now positioned between that baseline scenario and a worst-case scenario that forecasts inflation peaking at 4.2%.
For the market, this revision increases the sensitivity of the euro, bonds, and interest rate expectations to two variables: how long the energy squeeze persists and how sticky services inflation remains. (Arl)
Source: Newsmaker.id
