Inflation, manufacturing up in Eurozone
New data shows that inflation grew by 1.8 percent in February over the same period last year. The growth was slightly less than the 1.9 percent that had been expected and remained below the 2 percent inflation ceiling set by the European Central Bank. Even though the inflation rate remains below where the ECB wants it to be, most analysts remain convinced that the Bank will issue another interest rate hike when it meets in March. A few analysts, on the other hand, believe that the Bank will wait until summer to raise rates again.
In a separate report, the purchasing managers’ index supported the inflation report, by showing that the Eurozone manufacturing sector is still growing. The index rose to 55.6 in February, up slightly from its January level of 55.5, but a bit lower than the 55.8 reading that had been expected. Any reading above 50 shows expansion in the sector. Growth in the index was helped by gains in France and Italy that more than compensated for a decline in Germany that was likely due to a hike in the value added tax there from January 1.
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