From Morningstar: 2025-05-02 06:16:00

Consumer prices in the eurozone rose by 2.2% year over year in April, meeting expectations. Core inflation, excluding volatile components, increased to 2.7%, above March’s 2.4%. Despite this, concerns remain about US tariffs impacting inflation levels. Services inflation saw the highest rise at 3.9%, driven by Easter timing. Energy prices fell.

The euro’s 10% appreciation against the dollar could lower headline HICP and real GDP by 0.1% each. Goldman Sachs predicts a 0.1-0.2% reduction in core inflation over the next two years due to euro strength. Further euro appreciation may lead to more persistent inflation drag. Trade war escalation could cause sharp inflation increase.

The European Central Bank is expected to continue its easing cycle in June amid economic challenges. Goldman Sachs projects three more interest rate cuts this year, reaching a terminal rate of 1.5%. The ECB cut rates by 25 basis points in April, with more cuts likely. Lower rates are seen as beneficial for equity markets.



Read more at Morningstar: Core Inflation in the Eurozone Rises in April