Market News

FRANKFURT (Reuters) - Euro zone inflation was lower last month than first estimated, mostly because of a revision in Germany, Eurostat said on Wednesday, easing concerns that unexpectedly strong price pressures could prevent further ECB interest rate cuts.

Inflation in the 20 nations sharing the euro was 2.3% in February, below the 2.4% first reported and in line with earlier economist estimates, a Eurostat statement showed.

However, underlying inflation, or prices excluding volatile food and energy costs, a figure closely watched by policymakers, was left unchanged at 2.6%, even if the monthly growth rate was cut to 0.5% from 0.6%.

The revision, though meaningful, is unlikely to move the needle much on expectations for the ECB's April policy meeting.

The bank has said that uncertainty is extremely high, so it would not make up its mind until it collected as much data as possible.

The ECB also has to factor in trade tensions, the likely increase in budget spending, a bigger burden in financing Ukraine's defence and falling energy costs.

Markets now see a 50% to 60% chance of a rate cut in April but have fully priced in a move by June. They also anticipate another cut before the end of the year, which would take the ECB's deposit rate to 2%.

The ECB now sees inflation oscillating around the current level for the rest of the year before falling to its 2% target in the first quarter of 2026.

(Reporting by Balazs Koranyi; Editing by Bernadette Baum)