Eurozone Inflation: Below 2% – ECB Meeting Outlook
- Eurozone inflation has fallen below the European Central Bank's (ECB) 2% target,registering at 1.9% in May.
- The ECB is expected to lower the deposit rate to 2% on Thursday in response to these figures. While inflation has generally remained near the target, recent forecasts...
- Recent global trade tensions have exerted downward pressure on eurozone inflation.
Eurozone Inflation Drops Below ECB Target; Rate Cut Anticipated
updated June 03,2025
Eurozone inflation has fallen below the European Central Bank’s (ECB) 2% target,registering at 1.9% in May. This decline, coupled with a services inflation rate drop from 4% to 3.2%, suggests the possibility of undershooting the ECB’s goal.
The ECB is expected to lower the deposit rate to 2% on Thursday in response to these figures. While inflation has generally remained near the target, recent forecasts have consistently projected medium-term rates around this level.
Recent global trade tensions have exerted downward pressure on eurozone inflation. Commodity prices have decreased, adn the euro has strengthened against the dollar. Economic uncertainty within the eurozone, combined with the European Commission’s decision to avoid retaliatory tariffs on the U.S.,has further contributed to this trend.
The decline in services inflation may not be permanent. Survey data indicates a perhaps higher trend than the May figure. Despite wage growth remaining at an all-time low of 6.2% in April, its rapid deceleration could limit medium-term inflation.
What’s next
The ECB’s anticipated rate cut will likely spark debate about potentially moving rates below neutral to stimulate the economy.