All eyes on the latest inflation figures out of the euro area as market players consider what the ECB will do next.
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Inflation in the euro zone eased slightly in February, following comments from the head of the European Central Bank that it will take some time to lower the rate.
Core inflation across the 20-member bloc came in at 8.5% in February, according to preliminary data released on Thursday. This indicates that prices are not coming down at the pace recorded a few months ago. Headline inflation stood as high as 10.6% in October, but reached a revised 8.6% in January.
Analysts polled by the Wall Street Journal had expected a lower February inflation rate of 8.2%.
Food prices increased month on month, reducing reductions in energy costs.
Core inflation picked up to an estimated 5.6% in February, from 5.3% in January.
In recent days, market players have been wondering whether the ECB will need to maintain its hawkish stance for longer, after February inflation figures from France, Germany and Spain were hotter than expected. .
ECB President Christine Lagarde said on Thursday that it will still take time to bring down inflation, according to comments reported by Reuters. The bank is targeting a prime rate of 2%.
The Frankfurt-based institution has indicated that another 50 basis point hike is on the cards for when the central bank comes off the hook later this month. In comments reported by Reuters, Lagarde said on Thursday that this move is still on that agenda, as inflation remains well above target.
Analysts at Goldman Sachs said earlier this week they were increasing rate hike expectations for the ECB and prices in a further 50 basis point increase in May.
European bond yields have been hovering at multi-year highs in recent days amid speculation that hawkish monetary policy is here to stay.
