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Euro zone inflation March 2024

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Two women hold an umbrella while sitting at an outdoor table of a cafe on April 01, 2024 in Rome, Italy. 

Emanuele Cremaschi | Getty Images News | Getty Images

Inflation in the 20-nation euro zone eased to 2.4% in March, according to flash figures published by the European Union’s statistics agency Wednesday, boosting expectations for interest rate cuts to begin in the summer.

Economists polled by Reuters had forecast the rate would hold steady against the previous month at 2.6%.

The core rate of inflation, excluding energy, food, alcohol and tobacco, cooled from 3.1% to 2.9%, also coming in below expectations.

However, inflation in services — a key watcher for the European Central Bank — remained stuck at 4% for a fifth straight month, pointing to continued pressure from wage growth.

Another indicator for the ECB released Wednesday, the euro area unemployment rate, stood at 6.5% in February, stable against January but down from 6.6% in February 2023.

Price rises in France and Spain came in lower than forecast last week. On Tuesday, headline inflation in the bloc’s biggest economy, Germany, was estimated at a three-year low of 2.2%.

Markets expect the euro zone’s central bank will begin lowering borrowing costs in June — a position reflected in the recent messaging of ECB decision-makers. They are next set to hold a monetary policy meeting on April 11.

Even Austrian central bank head Robert Holzmann, an ECB hawk who previously said it was possible that no cuts at all would take place in 2024, told Reuters this week that he did not have an “in-principle objection to easing in June.”

“The current narrative is clearly pointing to a first rate cut in June,” Carsten Brzeski, global head of macro at ING, said in a note Wednesday. That is due to the March inflation print as well as the data on wage growth and ECB staff forecasts on gross domestic product and inflation that will be released by then, he said.

Kamil Kovar, senior economist at Moody’s Analytics, said the release of Wednesday “poured cold water on the idea that the last mile in defeating inflation will be hardest,” and reiterated a call for five rate cuts this year.

“Inflation has declined despite a jump in energy inflation, and a boost from an early Easter. Even if the good headline number masked some less favorable details, such as services coming in hot while food prices tumbled, inflation overall is still on course to dip below 2% sometime during the summer,” Kovar said.

Economics

American cities are criminalising homelessness. Will that help?

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DAVINA VALENZUELA watches as sanitation workers heave most of her belongings into a garbage truck. The 33-year-old has been homeless for more than a year, and was sleeping in a dusty alley in central Fresno, the biggest city in California’s Central Valley. The truck devours bags of clothes, a stroller, a pile of hypodermic needles and around $120—much of it in change. Police officers arrest her and a friend and sit them in the back of a truck. They are given tickets for camping in a public place, which became a misdemeanour crime in September in an attempt to shrink the city’s homeless encampments. “That’s all I have right there,” she says, once her handcuffs are taken off. “I don’t know how I ended up here.”

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Economics

Pete Hegseth is purging both weapons and generals

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THE PENTAGON has been mired in chaos in recent months. Pete Hegseth, the secretary of defence, stands accused of mishandling classified information. Many of his aides have been let go over alleged leaks (accusations they deny). Top generals have been fired for no discernible reason beyond their colour or sex. The department is in “a full-blown meltdown”, says John Ullyot, a Hegseth loyalist who served as chief spokesman until April. Yet Mr Hegseth is pressing ahead with sweeping reforms that will change the size, shape and purpose of America’s armed forces.

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Economics

Where the Trump administration has science on its side  

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BACK IN JANUARY Donald Trump signed executive order 14187, entitled “Protecting Children from Chemical and Surgical Mutilation”. He instructed federally run insurance programmes to exclude coverage of treatment related to gender transition for minors. The order aimed to stop institutions that receive federal grants from providing such treatments as well. Mr Trump also commissioned the Department of Health and Human Services (HHS) to publish, within 90 days, a review of literature on best practices regarding “identity-based confusion” among children. The ban on federal funding was later blocked by a judge, but the review was published on May 1st.

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