ECB has signalled ‘confidence that disinflationary forces are at work’

Eurozone inflation rose to 2.5% in January, up from the 2.4% estimate for December.

Core inflation remained unchanged at 2.7%, with price pressures in services easing slightly to 3.9% from 4.0%.

Despite the headline figure accelerating on the back of sharply higher energy prices, inflation is broadly evolving in line with expectations.

The European Central Bank (ECB) has signalled confidence that disinflationary forces are at work, suggesting that they will view the most recent uptick as a blip.

Cebr hence expects the ECB to cut interest rates by 25 basis points at its March meeting.

The timing and extent of further easing will depend on the evolution of many factors, including importantly the fallout from the imposition of U.S. tariffs and the USD surge.