Headline consumer price growth in the euro area last month extended its push beneath the target of the European Central Bank, which is expected to hold its interest rates at current levels Thursday and beyond.

In a preliminary report, the EU statistics office Eurostat said annual Eurozone inflation last month dropped to 1.7% – the market estimate – from December’s 1.9%. This pushed the measure well below the ECB’s medium-term target of 2.0%.

The less-volatile euro area core rate eased to 2.2% y/y – a four-year low – from 2.3%, the December reading and the market forecast.

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FRANKFURT – Euro area central bankers are widely expected to hold interest rates at current levels Thursday as officials continue to feel at home in the public lender’s “good place”.

Analysts said the European Central Bank looks unlikely to make any moves anytime soon, or this year for that matter, with the wide majority of economists suggesting the first shift in interest rates will come in 2027.

Inflation continues to abate, with the annual headline rate dropping to 1.7% last month, according to preliminary data from the EU statistics office. This was the lowest mark since September 2024, pushing it well below the ECB target of 2% over the medium term. More importantly, the core rate (likely what the ECB is really watching) dropped unexpectedly to 2.2% last month, its weakest since October 2021. These declines could revive talks of rate reductions, some observers noted.

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LONDON – With little likelihood of a policy move from the Bank of England this week, investor attention will centre to the accompanying statement and updated economic forecasts.

The latest economist poll expects the Monetary Policy Committee to vote to keep the Base Rate unchanged at 3.75%, with the decision due at midday on Thursday.

How policymakers communicate their future intentions will be closely scrutinised. This may be reflected in the voting split, though analysts are divided on whether the outcome will be 6–3 or 7–2.

Morgan Stanley expects three dissenters – Swati Dhingra, Alan Taylor and Dave Ramsden – to vote for a 25bp cut. The bank said uncertainty around the meeting’s policy “lean” remains wide. “Our view is that the updated forecasts and limited near-term pricing of cuts will push Governor Andrew Bailey towards more labour-market-focused messaging,” analysts said.

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Economy watchers are once again turning to a patchwork of unofficial data as another federal spending impasse has suspended government figures.

The Bureau of Labor Statistics said Monday the January jobs report wouldn’t be released as scheduled Friday because funding for the Labor Department, of which BLS is part, ran out last week. While Congress approved new funding Tuesday, the BLS hasn’t said when the jobs data would be released.

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