FRANKFURT, Germany (AP) — Inflation in Europe eased to an annual 2.4% in February, supporting the case for another interest rate cut from the European Central Bank – but leaving open how far the central bank will go in lowering borrowing costs for an economy that’s still struggling to show robust growth.
The February figure for the 20 countries that use the euro currency was down from 2.5% in January as energy inflation dwindled and major economy France saw a rate of only 0.9%, the European Union’s statistical agency Eurostat reported Monday.
The lower consumer price inflation figure supports the view that the ECB is succeeding in its battle to get inflation back to its target of 2% and can focus on supporting tepid growth. The bank’s rate-setting council is expected to cut its benchmark rate by a quarter point to 2.5% on Thursday. That rate influences borrowing costs throughout the economy, and a cut will make it easier to borrow money to buy a house or expand a factory.
A rate cut Thursday had already been pencilled in by analysts but the new figure gives added support for a cut.
Growth worries have come to the fore after the eurozone stagnated in the last three months of 2024, as consumers still smarting from an outbreak of inflation remained cautious in their spending habits. Business worried about possible new tariffs on exports to the US under President Donald Trump. Political paralysis in France, where no party has a majority in parliament to address an outsized budget deficit, and the transition to a new government in Germany after the Feb. 23 national election have also left businesses uncertain about the future.
