The unexpected decline in German CPI was offset by the French CPI, the consensus is that the ECB will maintain its current policy stance until the end of 2027.

In the beginning of 2026, against the backdrop of weak economic recovery in Germany, the inflation rate unexpectedly slowed to the target level set by the European Central Bank. Data released by the German Federal Statistical Office on Friday showed that the Consumer Price Index (CPI) rose by 2% year-on-year in February, a decrease of 0.1 percentage points from 2.1% in January. It is worth noting that economists surveyed earlier had generally predicted that the inflation rate would remain stable, but this data unexpectedly fell below market expectations. Although the German economy is showing signs of recovery after years of stagnation, the German Federal Bank still believes that its growth momentum is "weak." Fiscal stimulus measures are expected to show more significant effects starting in the spring, pushing economic growth to at least 1% this year and helping to stabilize inflation at the target level of 2%. European Central Bank officials have repeatedly stated that they are satisfied with the current level of borrowing costs and have not adjusted them since June last year, as the inflation rate has been hovering near the 2% target. Economists generally predict that interest rates will not be adjusted until at least the end of 2027, even if the current inflation rate continues to be below the target range set by the central bank. Eurozone inflation data will be released next Tuesday, with analysts predicting that the data will reach 1.7%. The slowdown in German inflation will be offset by higher-than-expected inflation pressures in France and SpainFrance's inflation rate has increased significantly to 1.1% (almost double the previous value), while Spain has slightly increased to 2.5%. Despite the European Central Bank's survey released earlier on Friday showing a decline in inflation expectations in the Eurozone, consumer survey results indicate that people expect prices to rise by 2.6% in the next 12 months and by 2.3% in the next five years. In addition, the European Central Bank is scheduled to hold its next interest rate decision on March 19, when officials will release the latest quarterly economic forecast report, which is typically seen as an important window for adjusting policy stance.