Euro zone inflation steady, reinforcing ECB rate cut case

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Euro zone inflation held steady as expected in April but a crucial indicator on underlying price pressures slowed, solidifying an already strong case for the European Central Bank to cut interest rates in June.

The ECB all but promised a rate cut on June 6, provided there is no nasty surprise in wage or price developments, and today's data remain consistent with the path the bank saw in its last round of projections in March.

Closely watched services inflation, stuck at 4% since the start of the year, eased to 3.7%, though much of that may be related to the early timing of Easter and policymakers say that rapid wage growth, the key component in services costs, remains a concern. Still, some policymakers appear to be walking back on earlier comments that the June cut should be followed by a series of moves since inflation was well on its way to the 2% target by sometime in 2025.

 

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