Eurozone Inflation Moves To Two-Year High

The rate of price growth in the 17 countries that share the euro quickened to the fastest pace in over two years during the second month of the year, mounting additional pressure on the central bank to raise interest rates, according to Bloomberg.

The rate of price growth in the 17 countries that share the euro quickened to the fastest pace in over two years during the second month of the year, mounting additional pressure on the central bank to raise interest rates, according to Bloomberg. On Wednesday, the European Union reported that eurozone inflation accelerated to 2.4% in February from 2.3% the month before, marking the highest rate since October 2008. The report confirmed an earlier estimate, and now marks the third consecutive month that price growth has exceeded the European Central Bank’s 2% target.

The report is likely to increase pressure on the ECB to tighten fiscal policy to contain inflationary pressure, although within the report consumer prices were only seen 0.4% higher from January. Mario Jung of BFH Bank said, “Euro-region inflation will remain above 2%,” and added his forecast for “The ECB to raise borrowing costs next month.” The ECB officially has forecast eurozone inflation of about 2.3% this year, and 1.7% in 2012. Core inflation inched lower to 1% from 1.1% during February.

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