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Eurozone inflation fell in March, but the ECB’s path is unclear

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  • The main reason for the 1.6 percentage point drop was lower energy costs.
  • These numbers do not provide strong enough evidence that the ECB may consider stopping the cycle of rate hikes, which began in July.
  • The European Central Bank raised interest rates by 50 basis points in March, bringing the main interest rate to 3%. However, it did not provide any indication of possible price decisions in the coming months.

Market stall in Madrid, Spain. Analysts digest the latest inflation figures from the Eurozone.

Europa Press News | Europa Press | Getty Images

Inflation in the Eurozone fell significantly in March as energy prices continued to fall.

The headline inflation rate in the 20-nation bloc was 6.9% in March, according to preliminary figures released by Eurostat on Friday. In comparison, in FebruaryThe headline inflation rate was 8.5%.

The main reason for this decline of 1.6 percentage points was lower energy costs.

However, there are other parts of the inflation basket that remain stubbornly high. Food prices contributed the most to the headline inflation reading for the month of March.

Core inflation – which excludes volatile energy, food, alcohol and tobacco prices – rose slightly from the previous month. reached 5.7% in March from 5.6% in February.

These numbers do not provide strong enough evidence that the ECB may consider stopping the cycle of rate hikes, which began in July.

European Central Bank member Isabel Schnabel said Thursday that headline economic inflation It started to fall, but core inflation proved to be steady.

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she said at an event Thursday, according to Reuters.

The European Central Bank raised interest rates by 50 basis points in March, bringing the main interest rate to 3%. However, it did not provide any indication of possible price decisions in the coming months.

The recent banking turmoil has raised questions about whether central banks have been more aggressive in moving interest rates to tackle inflation. ECB Chief Economist Philip Lane said further interest rate hikes would be needed to tackle soaring inflation if banking instability dissipated.

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