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BRUSSELS: The eurozone’s annual rate of inflation dropped further than expected in March, official data showed Wednesday, fuelling hope that the European Central Bank will cut interest rates in June.

Consumer price rises in the single currency area slowed to 2.4 percent, from 2.6 percent in February, the EU’s statistics agency said.

Analysts surveyed by FactSet had predicted inflation would remain stable at 2.6 percent while economists asked by Bloomberg expected a smaller drop to 2.5 percent.

The figure is getting closer to the ECB’s two-percent target, which will make the case for cutting rates in June stronger, but analysts do not expect a cut at the next monetary policy meeting on April 11.

The Frankfurt-based bank has held rates steady since October 2023 after an aggressive rate-hiking campaign to tame soaring inflation.

Eurozone inflation has fallen significantly from the peak of 10.6 percent reached in October 2022 following Russia’s invasion of Ukraine, which brought a hefty impact on energy costs in Europe.

Core inflation, which strips out volatile energy, food, alcohol and tobacco prices — and a key indicator for the ECB — also dipped further than expected, to 2.9 percent in March from 3.1 percent in February.

Analysts for Bloomberg and FactSet had expected core inflation to record a smaller fall to 3.0 percent.

“The fall in both headline and core inflation in March suggests that the ECB is very likely to begin cutting interest rates in June,” said Andrew Kenningham of London-based consulting firm Capital Economics.

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