- Eurozone inflation eased slightly to 8.5% in February, despite the ECB signaling that the cycle of rate hikes may not be over yet.
- Core inflation rose to an estimated 5.6% in February from 5.3% in January.
All eyes are on the latest inflation figures from the euro zone as market participants ponder what the ECB will do next.
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Euro-zone inflation eased slightly in February after the European Central Bank governor commented that a rate cut would take time.
Headline inflation across the 20-member bloc was 8.5% in February, according to preliminary data released on Thursday. This suggests that prices are not falling at the pace that has been registered in recent months. Headline inflation was 10.6% in October but reached a revised 8.6% in January.
Analysts polled by the Wall Street Journal were expecting a lower inflation rate of 8.2% in February.
Grocery prices rose month-on-month, offsetting the decline in energy costs.
Core inflation rose to an estimated 5.6% in February from 5.3% in January.
In the past few days, market participants have been wondering whether the ECB will have to maintain its hawkish stance any longer after February inflation figures from France, Germany and Spain came out hotter than expected.
ECB President Christine Lagarde said Thursday that bringing inflation down would take time, according to comments reported by Portal. The bank is aiming for a base rate of 2%.
The Frankfurt-based body has hinted that another 50 basis point hike is on the cards if the central bank adjourns later this month. In comments from Portal on Thursday, Lagarde said that move is still on the table as inflation is well above target.
Analysts at Goldman Sachs said earlier this week that they are upgrading rate hike expectations for the ECB, pricing in another 50 basis point hike in May.
European bond yields have been hovering around multi-year highs over the past few days amid concerns that monetary tightening is here to stay.