 People do shopping at a supermarket in Vienna, Austria. (Photo: AFP/VNA) |
Eurostat attributed the result mainly to a slowdown of increases in food prices, adding that the inflation remains above the European Central Bank’s two-percent target and above the forecast level of 2.7% by Bloomberg and FactSet’s survey. The inflation is well below the peak of 10.6% recorded in October 2022.
With the January inflation rate, the European Central Bank (ECB) will likely maintain its high interest rate policy in the next few months.
David Kohl, chief economist of Julius Baer Bank, Switzerland, said that when looking at fundamentals, it’s necessary to consider that inflation is coming down. Growth is basically non-existent in the eurozone.
“That probably means a tight monetary policy is not appropriate. So when to change that? We think the April meeting is the most likely time that change will occur,” said Kohl.
At the ECB Governors’ Meeting on January 25, the ECB decided to keep the record high interest rate at 4%. According to ECB President Christine Lagarde, it is still too early to discuss cutting interest rates, adding ECB will only consider this possibility after the inflation rate in the eurozone is lowered to 2%.