Eurozone Inflation Cooler Than Thought Underscoring Sluggish Economy F585743
Wall Street Journal6 days ago
Eurozone Inflation Drops to 2.3% Amid Trade Policy Uncertainty
Above: ECB Pres. Christine Lagarde at a rates decision news conference in Frankfurt, Germany, on March 6, 2025. Image copyright: Alex Kraus/Bloomberg via Getty Images
The Spin
Pro-establishment narrative
The deflation process is well on track, with inflation developing broadly in line with expectations. Most measures of underlying inflation suggest that inflation will settle around the 2% target on a sustained basis, while monetary policy transmission is working effectively throughout the continent. The soft landing is nearly complete, leaving Europe as a stable market to invest in over the medium term.
Establishment-critical narrative
Unexpectedly low inflation in Europe is a sign of a stagnant economy that continues to lag behind the US since the pandemic. In addition, the EU's large-scale investment in defense is likely to push inflation too far in the other direction and stretch budgets to the limit across the continent. While the statistics may look positive at first glance, a deeper inspection finds a precarious European market still in need of reform.