Eurozone Inflation Hits Record 5.1% In Jan, Boosting Rate Hike Bets

• Euro-area inflation unexpectedly accelerated to a record, overshooting expectations by the most in at least two decades and fueling bets the European Central Bank could raise interest rates earlier than expected. 
• Consumer prices jumped 5.1% YoY, up from 0.9% in January 2021 and 5% in December. The median estimate in a Bloomberg poll of 44 economists saw a reading of only 4.4% and none predicted inflation gaining pace. 
• Money markets now see the ECB lifting rates by 10 basis points by July, rather than by September. The euro extended its advance, climbing 0.4% against the dollar to $1.1315. 
• While slowing in Germany and France, the euro zone’s two biggest economies, the spike in energy costs pulled price growth higher across the 19-member currency bloc as a whole. It was more than a percentage point higher than analysts predicted in Italy, where it accelerated to 5.3%. Stripping out energy and other volatile components like food, core inflation was 2.3%, down from last month’s 2.6% reading. 
• Wednesday’s data come as ECB officials gather to discuss monetary policy against a backdrop of increasingly aggressive tightening by the Federal Reserve and with the Bank of England primed to lift interest rates for a second time in three months.

(Source: Bloomberg)