Eurozone interest rate cut expectations rise as inflation hits 2.4% in April

inflation FILE PHOTO: European Central Bank (ECB) president Christine Lagarde speaks during a press conference following the Governing Council's monetary policy meeting, in Frankfurt, Germany April 11, 2024. REUTERS/Kai Pfaffenbach/File Photo
European Central Bank president Christine Lagarde. The latest Eurozone annual inflation reading boosted hoped of interest rate cuts. (REUTERS / Reuters)

Eurozone annual inflation came in at 2.4% in April, charting a flat line from March and bolstering expectations of a rate cut for the bloc before the summer rounds out. The figures met expectations.

Core inflation, a reading that strips out volatile indicators, hit 2.7% for April.

The latest reading compares with inflation of 7% a year earlier, according to Eurostat, the statistical office of the European Union.

Services, food and tobacco were the top offenders spurring on price increases, while the heat came out of the energy market as tensions continue to simmer in the Middle East.

The lowest annual rates were registered in Lithuania (0.4%), Denmark (0.5%) and Finland (0.6%). The highest annual rates were recorded in Romania (6.2%), Belgium (4.9%) and Croatia (4.7%). Compared with March 2024, annual inflation fell in fifteen member states, remained stable in four and rose in eight, the data showed

Estimates from the Eurozone this week suggest that inflation will fall faster than previously expected this year, as the shock from conflict in the Red Sea has taken a smaller toll on the region than previously thought.

Read more: FTSE 100 LIVE: European stocks tepid as UK chancellor sets out more tax cut plans

The European Commission said annual inflation is set to drop to 2.5% this year, before reaching the European Central Bank’s 2% target in the second half of 2025.

“We believe we have turned a corner,” said Paolo Gentiloni, the EU’s economy commissioner. “We expect an uptick in growth this year and further acceleration in 2025. Meanwhile inflation is set to fall further and reach the ECB target next year.”

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