Eurozone Inflation Trends and ECB Rate Hike Predictions

Pantheon Macroeconomics analyst Klaus Vistesen has reported that the Eurozone inflation rate is approaching 3% and may remain at this level for some time. According to Jin10, data shows that the inflation rate in the Eurozone rose to 2.6% in March, surpassing the initial estimate of 2.5%. Vistesen noted that despite financial markets anticipating the resolution of the Iran conflict in due course, a significant inflation shock is still anticipated. Pantheon Macroeconomics projects that inflation will reach 2.8% in April, driven by energy prices. While energy inflation is expected to decrease next year, core inflation is predicted to rebound. Vistesen stated that a moderate but persistent rise in inflation could prompt the European Central Bank (ECB) to raise interest rates and maintain them at higher levels. In contrast, more extreme scenarios might lead to aggressive rate hikes followed by cuts shortly thereafter. Pantheon Macroeconomics forecasts that the ECB will raise rates twice this year.