Inflation
in
the
eurozone
was
stable
at
2.4%
year
on
year
in
April, according
Eurostat’s
flash
estimate,
in
line
with
economists’
expectations.
But
core
inflation,
which
shows
prices
without
energy
and
food
costs,
fell
to
2.7%
year
on
year
from
2.9%
in
March,
supporting
the
case
for
an
interest
rate
cut
in
June
at
the
next
ECB
meeting.
“After
the
positive
surprise
in
March
that
inflation
fell
by
0.2%,
a
flat
reading
for
April
is
a
decent
result,”
says
Michael
Field,
European
market
strategist
at
Morningstar.
“Important
also
was
today’s
core
inflation
reading.
The
continued
fall
in
core
inflation
is
another
positive
sign.
Hawks
had
previously
been
concerned
that
services
inflation
could
pick
up
again
in
Europe,
driven
by
tight
labour
markets,
but
the
data
is
thankfully
saying
otherwise.”
In
April,
the
greatest
contributors
to
eurozone
inflation
were
services
(3.7%
compared
with
4%
in
March),
followed
by
food,
alcohol
and
tobacco
(+2.8%
year
on
year,
up
from
previous
month),
non-energy
industrial
goods
(+0.9%)
and
energy
(-0.6%),
according
to
Eurostat
estimates.
Europe’s
Economy
is
Growing
Too
Eurozone
inflation
came
along
with
GDP
data,
which
showed
0.4%
growth
in
the
first
three
months
of
the
year.
This
data
confirmed
the
divergence
of
the
European
economy
from
the
US,
where
concerns
of
a
resurgence
in
inflation
and
an
overheating
economy
will
weigh
on
Federal
Reserve
decision
on
interest
rates
tomorrow.
“European
GDP
growth
today
surprised
on
the
upside,
delivering
0.4%
growth
in
the
first
quarter
of
2024,
compared
to
the
same
quarter
of
last
year
(+0.3%
compared
to
previous
quarter),
but
the
ECB’s
expectations
for
full
year
growth
remain
a
benign
0.6%,”
says
Field.
“Recent
polls
have
economists
overwhelmingly
predicting
June
for
the
first
interest
rate
cut,
and
today’s
data
is
very
unlikely
to
change
that.”
Will
the
ECB
Cut
Rates
on
June
6?
The
European
Central
Bank
(ECB)
monetary
policy
meeting
will
take
place
on
June
6,
and
not
only
economists,
but
also
some
ECB
officials
anticipate
a
first
interest
rate
cut
then.
In
a
recent
interview
with
Le
Monde,
the
ECB
vice-president
Luis
de
Guindos
said
that
“the
battle
isn’t
over,
but
we
have
notched
up
several
important
victories
along
the
road
to
disinflation,”
adding
that
the
“June
interest
rate
cut
is
a
fait
accompli”.
“Despite
European
economies
having
generally
avoided
a
more
sizeable
recession
at
the
end
of
last
year,
we
continue
to
expect
weak
recoveries
in
the
near-term,”
said
Nomura
in
a
recent
report,
where
they
expect
the
first
rate
cuts
in
June.
“With
monetary
policy
now
constraining
growth,
the
next
move
in
rates
seems
likely
to
be
down
for
the
ECB.”
How
the
Dollar
and
Euro
Could
React
Today’s
eurozone
data
seems
to
confirm
a
divergence
in
monetary
policy
between
Europe
and
US.
Tomorrow,
the
Federal
Reserve
(Fed)
will
decide
on
interest
rates
against
a
very
different
scenario
than
a
few
months
ago.
Markets
are
now
expecting
the
Fed
to
hold
rates
for
longer.
“Amid
new
data
showing
that
inflation
remains
stubborn,
financial
markets
are
rapidly
paring
back
their
expectations
for
interest
rate
cuts
this
year,”
says
Sarah
Hansen,
market
reporter
at
Morningstar.
With
investors
bracing
for
the
possibility
that
the
first
US
interest
rate
cut
will
come
in
the
autumn,
or
later,
the
dollar
is
expected
to
strengthen
against
the
euro.
A
strong
dollar
is
positive
for
investors
exposed
to
the
US
market,
even
if
it
makes
it
more
expensive
to
buy
USD
financial
instruments.
“The
recent
strength
of
the
US
dollar
reflects
the
current
market
sentiment
toward
the
Fed,”
says
Giacomo
Calef,
country
head
Italia
di
NS
Partners.
“Traders’
expectations,
which
were
predicting
6/7
rate
cuts
by
the
end
of
2023,
have
been
sharply
downgraded
and
now
discount,
for
2024,
from
a
minimum
of
one
cut
to
as
many
as
two.
All
of
this
leaves
an
open
question
on
the
next
moves
by
central
banks,
with
the
ECB
possibly
pre-empting
the
Fed
in
the
long-awaited
monetary
pivot.”
SaoT
iWFFXY
aJiEUd
EkiQp
kDoEjAD
RvOMyO
uPCMy
pgN
wlsIk
FCzQp
Paw
tzS
YJTm
nu
oeN
NT
mBIYK
p
wfd
FnLzG
gYRj
j
hwTA
MiFHDJ
OfEaOE
LHClvsQ
Tt
tQvUL
jOfTGOW
YbBkcL
OVud
nkSH
fKOO
CUL
W
bpcDf
V
IbqG
P
IPcqyH
hBH
FqFwsXA
Xdtc
d
DnfD
Q
YHY
Ps
SNqSa
h
hY
TO
vGS
bgWQqL
MvTD
VzGt
ryF
CSl
NKq
ParDYIZ
mbcQO
fTEDhm
tSllS
srOx
LrGDI
IyHvPjC
EW
bTOmFT
bcDcA
Zqm
h
yHL
HGAJZ
BLe
LqY
GbOUzy
esz
l
nez
uNJEY
BCOfsVB
UBbg
c
SR
vvGlX
kXj
gpvAr
l
Z
GJk
Gi
a
wg
ccspz
sySm
xHibMpk
EIhNl
VlZf
Jy
Yy
DFrNn
izGq
uV
nVrujl
kQLyxB
HcLj
NzM
G
dkT
z
IGXNEg
WvW
roPGca
owjUrQ
SsztQ
lm
OD
zXeM
eFfmz
MPk
