Eurozone inflation dropped to 1.7% in January, below the European Central Bank’s (ECB) 2% target, driven by lower energy costs and a stronger euro. Core inflation fell to 2.2%, the lowest since October 2021, while services inflation decreased to 3.2%. The ECB is expected to maintain its benchmark interest rate at 2% during its upcoming meeting, with a predicted average inflation of 1.9% for the year. Traders see a slim chance of a rate cut later in 2023, assigning a 20% probability to a reduction by September.
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