From Morningstar:

Eurozone inflation fell to 2.6% in February, slightly higher than expected but down from 2.8% in January. The European Central Bank likely to revise inflation expectations lower on March 7 but keep interest rates unchanged. Core inflation, excluding energy and food, was at 3.1%. European stock markets rose post-release, signaling relief.

Unemployment figures in the eurozone have been steadily decreasing since the height of the pandemic, with 7.1% recorded in January, a significant drop from 8.1% in the previous year. Some leading economies like Germany and France have seen improvement, with Germany’s jobless rate falling from 4.5% in January to 4.4% in February.

As the European Central Bank plans its monetary policy meeting on March 7, speculation rises around potential interest rate cuts amidst the falling inflation rates. Market expectations imply two cuts each from the Federal Reserve and ECB by July, a more reasonable forecast than previously. Wage data will be closely monitored for signs of inflation pressures.

Despite the current necessary focus on curbing inflation, market analysts point out the need to keep a close eye on wage dynamics post-pandemic. The lack of significant labor market movements could prevent wage inflation from affecting overall price levels. The ECB is expected to keep a vigilant stance to ensure stable inflation and price levels.



Read more at Morningstar: Eurozone Inflation Falls Again, ECB Meeting in Focus