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Eurozone inflation held steady at 2.2% in April in the face of US president Donald Trump’s trade war, according to the latest flash reading of price pressures on Friday.
The figure was slightly above a 2.1% year-on-year inflation forecast from economists polled by Reuters. However, underlying inflationary pressures appeared to increase.
Core inflation in the currency bloc, which excludes volatile food, energy, alcohol and tobacco, jumped to 2.7%, up from 2.4% — higher than the 2.5% expected by economists.
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Meanwhile, services inflation, which is closely watched by the European Central Bank (ECB), also rose to 3.9%, up from 3.5% in March which could give some policymakers room for pause.
The ECB has cut interest rates three times this year so far, and six times in a row, with another two cuts expected in 2025.
Economists see a more than 80% chance of another rate cut in June and see at least one more move before the end of the year, which would take the ECB’s deposit rate to 1.75% or lower.
Franziska Palmas, senior Europe economist at consultancy Capital Economics said: "April’s rise in services inflation is unlikely to worry ECB officials too much as it was probably driven mainly by Easter timing effects.
"We think services inflation will start falling again in the coming months and that US tariffs will prove disinflationary for the euro-zone, paving the way for two more rate cuts this year."
It came as eurozone unemployment data came in at 6.2% in March, unchanged relative to a revised February reading. The youth unemployment rate was 14.2%, down from 14.3% in the previous month.
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