PT Solid Gold Berjangka | German Inflation Slows Further as ECB Readies June Rate Cut


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Solid Gold Berjangka | Here’s a summary of the information provided about German inflation and its implications for the European Central Bank (ECB):

  • German Inflation Eases: In March, German inflation eased for the third consecutive month, indicating a slowdown in price increases. Consumer prices rose by an annual rate of 2.3%, down from 2.7% in February. This figure was also below the 2.4% median estimate in a Bloomberg poll of economists. The decrease was mainly attributed to lower food costs.
  • ECB’s Potential Interest Rate Cut: The easing of inflation supports expectations that the ECB will begin lowering interest rates in June. This move is seen as a response to the overall weakening inflation trend across the Eurozone.
  • European Inflation Trends: France also reported a slowdown in inflation, while price gains accelerated in Italy and Spain. Policymakers have warned that achieving the 2% target won’t be a smooth path.
  • Impact of Withdrawn Aid Measures: As governments in the region withdraw aid measures introduced during periods of high energy costs, inflation is experiencing one-off effects. In Germany, tax changes and a cheap transport ticket introduced in 2023 are expected to exert upward pressure on inflation, according to Deutsche Bank economist Sebastian Becker.
  • ECB’s Position: The overall trend of weakening inflation allows the ECB to prepare investors for a potential reduction in borrowing costs in June. Euro-zone data expected on Wednesday are anticipated to show a dip to 2.5%.
  • Business and Wage Expectations: In Germany, fewer companies are planning to raise their prices, particularly in consumer-related industries. The Ifo institute reported that an index of such expectations fell to the lowest level in three years in March. However, there is a concern about labor-market resilience and substantial wage gains, which could keep underlying inflation elevated.
  • Policy Meeting Outlook: Most officials are expected to exclude a rate cut at the upcoming policy meeting due to the slow confirmation of a moderation in pay increases.

This summary captures the key points regarding German inflation, the ECB’s potential response, European inflation trends, and expectations for business and wage dynamics in Germany.