FRANKFURT – Inflation in the Eurozone edged up to 2.9% last month, influenced partly by Germany’s subsidy measures aimed at reducing heating bills, yet core inflation is on a downward trend, now at 3.4%. Amid these developments, the European Central Bank (ECB) maintains a cautious stance on adjusting interest rates, signaling that any potential rate cuts could be postponed until at least mid-2024.
The ECB’s benchmark interest rate remains at 4%, as the central bank watches for the impact of disparate inflation rates across member countries. Germany saw a notable inflation increase, attributed to the subsidies, while France reported a modest uptick and Spain’s inflation rates remained steady.
Economists are forecasting an average inflation rate of 2.7% for the first quarter, which is slightly more optimistic compared to the ECB’s own projection of 2.9%. The ECB is keeping a close eye on wage growth and corporate profits, key factors that could influence the timeline for achieving its inflation target of 2%. The central bank’s cautious approach reflects the balancing act of supporting economic growth while aiming to control inflation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : Investing.com – https://www.investing.com/news/economy/eurozone-inflation-climbs-to-29-in-december-ecb-cautious-on-rate-cuts-93CH-3268389
