Eurozone Feb CPI Data: Is The ECB In Control?

Investors will be awaiting Thursday’s eurozone CPI reading for February, forecasted at 8.2%, a significant decline from January’s 8.6% reading. This scenario would be welcomed by the ECB, implying a fourth consecutive decline in headline inflation.


The Consumer Price Index (CPI) measures the change over time in the prices of consumer goods and services acquired, used, or paid for by households. It is an important measure of inflation in the eurozone.


As published by Eurostat, the latest fall in the eurozone's CPI in January was achieved by a slowdown in energy inflation which read 18.9% vs 25.5% in December, while prices increased at a faster rate for both non-energy industrial goods (6.7% vs 6.4%) and food. Services inflation remained unchanged at 4.4%.


The Stoxx 600 Index, representing large, mid and small-cap companies among 17 European countries, peaked in January 2022 at 495.46. Currently roaming above the 460 level, the index could be heading back towards this all-time high.


To date, the 2-Year and 5-Year German bonds are trading at 3.16% and 2.77% respectively. As projected by Trading Economics analysts, both are forecasted to trade higher at 4.41% and 3.84%, respectively in 12 months, suggesting an increase of 1.25% and 1.07%.


In her last meeting, ECB President Lagarde stated that the central bank will maintain its restrictive policy until they are confident that these rates will bring inflation in the eurozone back to its 2% target. Moreover, the governing council announced that they are intending to raise interest rates by 50 basis points in March.





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