A Significant Decline in Inflation in France Reignites Discussions of a Possible Interest Rate Cut by the European Central Bank (ECB). In March, France recorded an inflation rate of merely 2.4 percent compared to the same month of the previous year, the lowest level since August 2021 and below economists' forecasts, which had expected a drop to 2.8 percent.

This decline is partly due to falling prices for fresh food and a slowed increase in energy prices. Similar trends were seen in Italy, where inflation at 1.3 percent was also below expectations and remained significantly below the ECB's target of two percent.

François Villeroy de Galhau, France's Central Bank Chief and Member of the ECB Council, Signaled That the ECB Might Consider a Moderate Interest Rate Cut as Early as Spring, Regardless of the Monetary Policy Decisions of the US Federal Reserve.

A survey among economists suggests that a majority expects an initial interest rate cut already in June, while a move in April is deemed unlikely. The ECB has kept the deposit rate, at which banks can park excess funds with the central bank, stable at 4.00 percent since mid-September, the highest level since the founding of the monetary union.

Discussions about a Rate Cut Fueled by the Latest Inflation Data Showing a Cooling of Price Increases in Two of the Largest Economies of the Eurozone

These developments could enable the ECB to ease its tight monetary policy aimed at combating inflation, with the goal of stabilizing the inflation rate at two percent.