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Inflation slows in the eurozone, moving closer to the central bank’s target

The annual inflation rate in most European economies fell for the third consecutive month, moving closer to the target set by the European Central Bank. Consumer prices in the 20 countries that use the euro rose 2.4 percent in the year through March, compared with 2.6 percent the previous month, the European Union reported on Wednesday.

This rate was slightly lower than economists’ expectations and brought headline inflation closer to the 2% target set by the ECB, which will hold its next meeting to set interest rates on April 11.

The central bank also closely monitors underlying inflation, which does not take into account the volatility of food and energy prices. This figure fell to 2.9% in the year to March in the euro zone, falling below 3% for the first time since the outbreak of Russia’s full-scale war against Ukraine in February 2022, driving up energy prices.

Germany, the euro zone’s largest economy, saw consumer prices rise at an annual rate of 2.3% in March, its slowest inflation since June 2021.

The latest figures support the view that the ECB could soon start cutting interest rates, which it kept stable last month at 4 percent. But analysts say the central bank will wait for further evidence that the cooling trend persists.

“Even though core inflation has eased, stubborn services inflation and the ECB’s desire for more wage data make a rate cut in April unlikely,” wrote Rory Fennessy, economist at Oxford Economics, in a note.

Inflation in the United States has slowed, but it has had a bumpy ride, reinforcing the Federal Reserve’s decision to proceed cautiously with possible interest rate reductions. The Bank of England has also kept rates relatively high as signs of inflation in Britain moderate.

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