| Time | Country | Event | Period | Previous value | Forecast | Actual |
|---|
| 07:00 | Germany | CPI, y/y | January | 3.7% | 2.9% | 2.9% |
EUR declined against most of its major counterparts in the European session on Friday as investors continued to weigh when the European Central Bank will begin lowering its interest rates.
The latest inflation data from Germany, the Eurozone's biggest economy, confirmed easing price pressures, adding to arguments in favour of monetary policy in the Eurozone.
German final January CPI came in at 2.9% YoY, in line with both flash estimates and economists’ expectations. This was the lowest rate since June 2021.
Markets foresee that the first rate cut by the ECB may come in April, even as policymakers continue to warn against easing policy too early.
The ECB’s policimaker Martins Kazaks said today that he prefers to be cautious and wait until the inflation story is over. “Then we can safely breathe and those rates can be lowered step by step,” he added. Kazaks also noted that, in his opinion, markets’ bets for a rate reduction at the ECB’s March or April meetings are too optimistic.
Meanwhile, his colleague Francois Villeroy de Galhau acknowledged that the ECB will probably cut rates this year, given the progress made on inflation. However, he did not specify when the move may occur.
Many economists believe that the rate-setters will wait for the release of the Eurozone’s first-quarter statistics on wages at the end of April before deciding on rate changes.