Germany’s 10‑year Bund yield declined to 2.68%, its lowest level since late November, as investors weighed the latest inflation data and its implications for European Central Bank policy. Regional CPI figures from Germany pointed to moderating price pressures in February, while France’s EU-harmonized index (HICP) quickened to 1.1% from 0.4% in January, exceeding the 0.7% consensus forecast. In Spain, HICP rose to 2.5%, up from 2.4% in January and above market expectations of 2.3%.
Money markets are currently pricing in only about a 30% probability of an ECB rate cut by December. Addressing the European Parliament on Thursday, ECB President Christine Lagarde said headline inflation is projected to move closer to the 2% target over the medium term. She noted that food inflation—crucial for consumer perceptions of prices—is expected to hover slightly above 2% later this year. Lagarde also stressed that the ECB will continue to monitor currency developments, but reiterated that there are no plans for direct intervention in foreign exchange markets.
