Setback for the ECB as inflation rises in two key eurozone economies
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Setback for the ECB as inflation unexpectedly rises in two of the eurozone’s largest economies
The European Central Bank has major headaches after inflation unexpectedly rose in two of the eurozone’s largest economies.
Inflation in France rose from 7 percent to 7.2 percent in February, reaching the highest level since the introduction of the euro in 1999. In Spain, it rose from 5.9 percent to 6.1 percent.
The figures cast doubt on hopes that tomorrow’s data will show eurozone-wide inflation has fallen from 8.6 percent to 8.1 percent in February.
Inflation battle: the European Central Bank has already raised interest rates from minus 0.5% last July to 2.5% and looks set to raise it to 3% on March 16 and to 4% by the end of the year
A higher-than-expected figure will put pressure on the ECB to continue aggressive rate hikes.
The central bank has already raised interest rates from minus 0.5 percent in July last year to 2.5 percent and it looks set to raise it to 3 percent on March 16 and to 4 percent by the end of the year.
“French inflation has not yet peaked,” said ING economist Charlotte de Montpellier. “Given that underlying global inflation is likely to continue to rise in the coming months, this will be further arguments for the ECB to raise interest rates further.”