Price growth in the eurozone landed at 2.4 per cent in April – E24

Euro inflation remained stable last month.

Price growth in the eurozone was 2.4 per cent in April, compared to the same time last year. This shows preliminary figures from the EU’s statistics agency.

It is the same level as in March, and completely in line with expectations, according to the estimates obtained by Bloomberg.

Core inflation, which excludes food, energy, alcohol and tobacco, fell at the same time to 2.7 per cent.

Thus, the underlying price increase continues to decline in the eurozone, but the decline was less than the economists’ expectation of a core inflation of 2.6 per cent.

Marius Gonsholt Hov, chief economist at Handelsbanken, points out that core inflation was stronger than expected. He also points out that the preliminary GDP figures for the eurozone in the first quarter showed stronger economic growth than expected.

– The latter is nice, but at the same time can help to keep price growth higher. The details show that the positive growth surprise was to be found across the major economies in the eurozone. Thus, we also see that interest rate expectations in the eurozone are somewhat up today.

– Less likely that we will get subsequent interest rate cuts

The European Central Bank’s (ESB) inflation target is two per cent, and price growth has thus not come down to where the ECB would like.

Hov does not believe that today’s inflation figures will change the fact that there will probably be a first interest rate cut in June.

– Given the clear signals from the ECB in advance, there is probably still nothing to shake the immediate plans to cut interest rates in June. But it is increasingly less likely that we will get a subsequent interest rate cut already in July. And the interest rate market has continued to tone down the number of rate cuts this year

Interest rate developments in important economies such as the eurozone and the USA are important for what Norges Bank does with interest rates here at home.

Hov believes it is still “doubtful that we will get an interest rate cut from Norges Bank as early as September”. That was what the central bank signaled as most likely at the previous Norges Bank meeting in March.

– Not in a climate where the expectations of cuts among the trading partners are pushed further in time. Rather, we repeat the message that we will get a cut from Norges Bank in December at the earliest.

Great faith in the June cut

At the interest rate meeting at the beginning of April, the central bank kept the interest rate unchanged at four percent. The interest rate in the eurozone has been at this level since September.

It is widely believed that the first interest rate cut will come in June. The market prices in a 90 percent chance of this.

In connection with the interest rate meeting in April, central bank governor Christine Lagarde stated that “some” members of the central bank wanted to cut interest rates already now, but that a clear majority wanted to wait.

Earlier today, inflation figures came from France, which show that price growth was 2.2 per cent in April, compared to the same time last year. In Germany, preliminary inflation figures were presented yesterday. Price growth was 2.2 per cent on an annual basis in April here as well.