Inflation in the Eurozone in January 2025 unexpectedly rose to 2.5%, higher than the forecasted 2.4% by experts. This causes the European Central Bank (ECB) to continue to maintain a cautious attitude toward interest rate cuts, amid significant economic instability.

📌 Inflation rises unexpectedly
According to a report from Eurostat, the consumer price index (CPI) increased by 2.5% compared to the same period last year, while core inflation (excluding food and energy) remains high at 2.7%. Some large economies like Italy and Spain recorded rising inflation, while Germany and France showed no significant fluctuations.

📌 The market still believes in interest rate cuts
Despite rising inflation, the market still bets that #ECB will continue to cut interest rates. Currently, the deposit interest rate has decreased to 2.75% after 5 adjustments since June 2024. Investors expect the ECB to cut rates at least 3-4 more times in 2025.

📌 Concerns about global trade war
In addition to inflation, the biggest risk to the European economy right now is trade tension with the US. President Donald Trump has just announced that he will impose stricter tariffs on the European Union, China, Mexico, and Canada. This raises concerns among European officials about a large-scale trade war.

The Governor of the Central Bank of France, Francois Villeroy de Galhau, called the move by the US "very concerning," while warning:

“Protectionism seems good at first, but in the end, everyone suffers.”

📌 ECB remains cautious
President Christine Lagarde stated that although energy costs are highly volatile and service prices are still rising nearly 4%, wage trends are declining, which could help curb inflation in the near future.

Many experts predict that the ECB will continue to cut interest rates this year but do not commit to a specific timeline. ECB Governing Council member Peter Kazimir emphasized:

“We will maintain stability, adjust as necessary, and focus on keeping the economy on track.”

💡 In summary:
Despite a slight increase in inflation, the ECB maintains a cautious stance regarding interest rate cuts. Trade risks from the US could be a larger influencing factor on the European economy in the coming months. Whether the ECB will continue to cut interest rates aggressively in 2025 will depend on actual economic developments! 🚀