Inflation rates in Germany and the euro zone were lower than expected in March, and the European Central Bank may cut interest rates in June

According to the Golden Ten report, Franziska Palmas, senior European economist at Capital Economics, said that the decline in inflation rates in major German states indicates that the inflation rates in both Germany and the euro zone in March will be lower than expected. This will provide relief to ECB policymakers, but we still think they will wait until June before cutting rates. Disaggregated data for North Rhine-Westphalia showed that the fall in headline inflation was mainly due to a fall in food inflation, although core inflation also fell. Meanwhile, France has released data showing a fall in inflation, while Italy's has risen, albeit less than expected. While a rate cut in April still looks unlikely, investors currently believe the possibility is not out of the question.