Finance
France and Spain inflation data, ECB survey bolster case for rate cuts
Published by Global Banking & Finance Review®
Posted on March 28, 2025
2 min readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on March 28, 2025
2 min readLast updated: January 24, 2026
Inflation in France and Spain fell below forecasts, supporting ECB rate cuts. Consumer expectations steady, but economic growth concerns remain.
FRANKFURT (Reuters) -Inflation in March came in far below forecasts in two of the euro zone's largest economies, data showed on Friday, while consumer expectations for price growth remained muted, bolstering bets for another European Central Bank rate cut.
The ECB has cut interest rates six times since June and markets now see an 80% to 85% chance of another move in three weeks, as price pressures seem to be easing on more modest wage hikes and continued economic stagnation.
Inflation in France held steady at 0.9% in March and came in below expectations for 1.1%. In Spain the figure fell to 2.2% from 2.9%, well below forecasts for 2.6%.
These numbers indicate that the overall euro zone figure, due on April 1, could also come below expectations and inch closer to the ECB's 2% target sooner than some policymakers had forecast.
While a full-blown trade war with the United States could upset price expectations, the ECB doubled down on its view that the main impact would be on growth.
"The effect would be fundamentally on economic activity," ECB Vice President Luis de Guindos said. "For inflation, a trade war would have a negative effect, ultimately a tariff is a tax on imported goods, but over the medium term the reduction in economic activity would compensate this initial impact in some way."
Consumers also appeared relaxed by the price effect of geopolitical tensions with the ECB's own survey showing moderating inflation perceptions and steady price expectations.
Median expectations for inflation over the next 12 months held at 2.6% while for three years ahead it was steady at 2.4%, the ECB said.
"We have good news on inflation... the disinflation process is continuing," de Guindos said. "We are convinced that in the next few quarters we'll achieve our definition of price stability, which is 2%, on a sustainable basis."
Consumers remained more pessimistic about economic growth, however, anticipating a 1.2% contraction over the next 12 months after seeing a decline of 1.1% in January.
(Reporting by Balazs Koranyi and Francesco Canepa; editing by Mark Heinrich and Hugh Lawson)
The article discusses the likelihood of ECB rate cuts due to lower-than-expected inflation in France and Spain.
Inflation in France was 0.9% vs. 1.1% expected, and Spain was 2.2% vs. 2.6% expected.
Consumers expect inflation to hold at 2.6% over the next 12 months and 2.4% over three years.
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