From Morningstar: 2025-03-28 08:44:00

Eurozone inflation data for March, set to be released on April 1, is expected to show a slight decrease from February. Core inflation is forecast to be at 2.5%, inching closer to the ECB’s 2% target. Services inflation remained the main driver in February, with contributions from food, alcohol, tobacco, and non-energy industrial goods.

Goldman Sachs projects core inflation to average 2.56% for Q1 2025, aligning with ECB projections. Economists anticipate a cooling trend in the upcoming months, with headline inflation expected to remain slightly above target for the year. Energy prices are lower, impacting overall inflation rates.

Eurozone inflation figures are due on April 1, just before potential US tariffs on European goods are implemented. ECB President Christine Lagarde warns of a potential 0.5% inflation increase due to trade tensions, affecting global growth and supply chains. The impact could lead to higher costs for European businesses and consumers.

The ECB’s next monetary policy meeting on April 17 in Frankfurt has markets cautious about further rate cuts. After the recent reduction in March, investors now expect rates to hover around 2% by year-end. Goldman Sachs suggests a rate cut in response to US tariffs, with a potential for two more cuts this year.

Economic divergence between the US and Europe, driven by tariff uncertainty, is shifting investments toward Europe. Morningstar economists note potential price increases in the US, creating a gap in inflation with Europe. European equities are increasingly attractive to international investors, with flows shifting from US to Europe-focused equity ETFs.



Read more at Morningstar: Eurozone Inflation: What to Expect from March’s Data