Markets
are
looking
to
flash
eurozone
inflation
figures
that
are
due
by
Eurostat
at
11am
Central
European
Time
on
Wednesday,
April
3.
The
data
release
will
come
after
the
European
Central
Bank
(ECB)
lowered
its
inflation
outlook
in
its
March
meeting,
leading
investors
to
expect
the
first
interest
rate
cut
in
June.
Economists
expectations
are
mixed.
“Consensus
has
eurozone
inflation
falling
to
2.5%
in
March,
another
leg
down
from
last
month
2.6%
reading,
albeit
a
small
one,”
said
Michael
Field,
European
equity
market
strategist
at
Morningstar.
According
to
Goldman
Sachs,
the
headline
Harmonized
Index
of
Consumer
Prices
(HICP)
–
a
measure
of
inflation
in
the
eurozone
–
is
expected
to
be
2.66%
higher
year
on
year
in
March,
up
from
2.59%
in
February.
Core
inflation
–
headline
inflation
excluding
energy,
food,
alcohol,
and
tobacco
–
will
remain
unchanged
at
3.10%
on
an
annual
basis.
Investment
bank
Nomura
forecasts
that
headline
HICP
inflation
will
be
unchanged
in
March
(at
2.6%)
and
core
inflation
will
decline
to
2.9%.
In
February,
the
highest
contribution
to
the
annual
euro
area
inflation
rate
came
from
services
(+1.73
percentage
points,
pp),
followed
by
food,
alcohol
&
tobacco
(+0.79
pp),
non-energy
industrial
goods
(+0.42
pp)
and
energy
(-0.36
pp).
Does
Easter
Affect
Eurozone
Inflation
Data?
“We
see
significant
uncertainty
around
the
estimate
given
the
early
timing
of
Easter,”
said
Goldman
Sachs
in
a
note.
However,
they
expect
that
eurozone
core
inflation
will
cool
to
2.4%
on
annual
basis
in
December
2024.
According
to
Nomura,
upside
risks
from
Easter
being
earlier
this
year
than
last
year
have
been
overstated,
because
“Easter
lies
right
at
the
end
of
March,
so
it
is
unlikely
to
be
captured
in
the
survey
of
prices,
which
is
usually
undertaken
at
the
middle
of
the
month.”
They
also
expect
that
electricity
prices
will
be
“broadly
weaker
across
all
euro
area
countries;
however,
aggregate
euro
area
fuel
prices
are
likely
to
rise.”
Will
the
ECB
Cut
Interest
Rates
Before
June?
Christine
Lagarde
said
that
ECB
will
be
unable
to
commit
to
a
path
of
interest
rate
cuts,
and
most
economists
expect
the
first
cut
in
June,
when
more
data
on
wage
slowing
will
be
available.
However,
Financial
Times
reported
that
the
newest
ECB
board
member,
Piero
Cipollone,
“has
warned
against
an
‘excessive
focus’
on
waiting
for
slower
wage
growth,”
so
he
may
be
prepared
to
argue
for
cutting
rates
in
the
next
central
bank’s
meeting
on
April
11.
“The
ECB
seems
leaning
toward
cutting
official
rates
in
June,”
said
Mauro
Valle,
head
of
fixed
income
at
Generali
Investments.
“Given
the
weak
macroeconomic
environment,
there
are
conditions
to
consider
an
early
start
in
April,
but
the
ECB
prefers
to
take
more
time
to
ensure
that
upcoming
inflation
data
do
not
present
any
negative
surprises.”
Morningstar
analyst
Michael
Field
added:
“The
last
mile
is
always
the
hardest,
so
for
investors
who
thought
the
path
to
2%
from
here
would
be
easy,
disappointment
awaits.
The
ECB
expects
inflation
to
fall
to
2.3%
by
the
end
of
the
year,
so
a
10
basis
point
fall
in
March
would
be
a
welcome
development.”
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