Germany’s 10-year Bund yield fell to 2.68%, its lowest level since late November, as investors assessed recent inflation figures and their implications for European Central Bank policy. Germany’s EU-harmonized inflation rate slowed to 2.0% in February, coming in just below the 2.1% consensus and aligning with the ECB’s target. Meanwhile, France’s HICP quickened to 1.1% from 0.4% in January, exceeding the 0.7% forecast. In Spain, HICP increased to 2.5%, topping both the previous month’s 2.4% and expectations of 2.3%. Money markets currently price in only a 30% chance of an ECB rate cut by December. Speaking to the European Parliament on Thursday, ECB President Christine Lagarde said headline inflation is expected to approach the 2% target over the medium term, with food inflation, key to consumer perception, projected slightly above 2% later this year. She also emphasized that the ECB will monitor currency movements but has no plans for direct intervention in foreign exchange markets.
