In April, Germany's Consumer Price Index (CPI) saw a month-on-month increase of 0.5% and a year-on-year rise of 2.2%. This data was weaker than expected, with month-on-month and year-on-year predictions at +0.6% and 2.3% respectively. However, it is consistent with the trend of increasing monthly price growth rates observed in other developed countries over recent months. For investors and traders, Germany's data serves as an indicator of the overall data trend for the entire Eurozone the following day.
FxPro senior analyst Alex Kuptsikevich notes that the likelihood of the 2% inflation target becoming a floor in the foreseeable future has increased, even though from 2009 to 2021, the 2% inflation target was considered a ceiling. For central banks, this means that when key interest rates are significantly higher than the inflation rate, they must maintain a restrictive monetary policy.
For the euro, this report is mildly negative, as the data published were weaker than expected, in contrast to recent data releases from the United States, Britain, and Australia, which exceeded expectations. In this situation, the European Central Bank may persist with the idea of lowering key interest rates at the beginning of June. Contrasting with the Federal Reserve's (Fed) stance this week, investors and traders are waiting for signs that the first policy easing could be delayed to the third or fourth quarter.
