Important data ahead of the ECB policy meetingThe eurozone will release core inflation rate
The eurozone will release the core inflation rate based on the Harmonized Index of Consumer Price (HICP). The index tracks changes in the prices of goods and services customers buy in all eurozone countries. The report is important because the European Central Bank (ECB) will consider the data when deciding on its monetary policy. The core inflation rate will come out on 2 March at 10:00 a.m. UTC.
Key takeaways
The market expects the report to give more clues about the ECB's monetary policy and the pace of rate hikes in 2023. If inflation comes out higher than anticipated, the euro will strengthen, backed by expectations of a hawkish policy from the regulator.
The latest data showed that eurozone inflation is slowing down. However, the market already priced in a 50-basis-point rate hike by the ECB. Thus, the euro may fall significantly if core inflation figures are lower than expected.
Overall, the euro experiences downward pressure as the Federal Reserve confirms its intention to hike rates further, and the U.S. dollar is strengthening. Therefore, signs of persistent inflation will likely cause only a slight increase in currency, while lower-than-anticipated figures may cause a major euro decline.
