Inflation rate in Eurozone falling faster than expected - impact on financial markets and interest rate turnaround

Inflation rate in Eurozone falling faster than expected - impact on financial markets and interest rate turnaround

According to a report by www.n-tv.de, economists are optimistic that inflation in the euro zone fell slightly in January. Consumer prices only rose by 2.8 percent compared to the same month last year, after they were still at 2.9 percent in December.

This low inflation rate gives the European Central Bank (ECB) leeway for a possible interest rate turnaround in the current year. However, despite the decline in inflation, this does not necessarily mean that the ECB will immediately cut interest rates. The ECB has struggled with a sharp rise in inflation in recent years and will therefore proceed cautiously.

Cypriot Councilor Constantinos Herodotou said that the reduction in interest rates could begin in 2024, barring any unexpected developments. However, easing measures too early could cause inflationary pressures to rise again. On the other hand, Herodotou warned against delaying the interest rate turnaround for too long as this could harm growth.

The inflation rate is currently falling faster than expected, and experts predict possible price stability in the third quarter of 2024. Core inflation, which excludes volatile energy and food prices, also fell, bringing the ECB's target of an inflation rate of 2.0 percent gradually into sight.

As a financial expert, it is important to note that the ECB's interest rate policy can have a significant impact on the markets and the financial industry. A possible turnaround in interest rates could affect investors and investors, as well as credit conditions for consumers and companies. It is therefore advisable to closely monitor the development of inflation and the ECB's monetary policy decisions in order to make informed investment decisions.