Eurozone core HICP inflation was 2.4% year on year in February. The figure matched forecasts.
Core HICP excludes energy, food, alcohol, and tobacco. The release indicates the pace of underlying price growth for February.
The February core inflation figure of 2.4% doesn’t change the current market narrative because it landed exactly as predicted. This suggests that the disinflationary trend is continuing but at a slow and stubborn pace. We should not expect this number to cause any major jolts in the market this week.
This steady data reinforces the European Central Bank’s cautious stance on cutting interest rates further. After the ECB began its easing cycle back in the summer of 2024, its officials have consistently signaled a gradual approach, and this report gives them no reason to accelerate. Therefore, expectations for a larger 50-basis-point cut at the next meeting should be priced out.
For rate traders, this means the front end of the curve, which reflects near-term policy, is likely anchored. A strategy to consider is selling volatility on near-term EURIBOR futures, as implied volatility is likely to shrink now that this key data point is out of the way. The market is paying for uncertainty that did not materialize.
We must remember that core inflation’s slow descent from its peak of 5.7% back in 2023 has been hampered by sticky services inflation. Data from Eurostat showed services inflation was still running close to 3.5% in the final quarter of 2025, driven by persistent wage pressures across the bloc. This latest reading confirms that bringing this final component down to the 2% target will be a prolonged effort.
In the equity derivatives space, this predictability is a positive sign, as it removes the risk of a hawkish policy surprise that could unsettle markets. This supports strategies that benefit from low volatility, such as selling out-of-the-money call and put options on the Euro Stoxx 50 index. We expect the VSTOXX index, a measure of Eurozone equity volatility, to drift lower from the 16-point level it averaged in January.
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