Eurozone inflation is gradually approaching the target of the European Central Bank

Jinshi data news on August 30th, the euro area's inflation rate fell sharply to its lowest level since mid-2021, when global consumer prices were just beginning to skyrocket, leading to an unprecedented rise in interest rates. The decline in the annual inflation rate paves the way for the European Central Bank to cut the benchmark interest rate next month, which will be the second interest rate cut by the European Central Bank this year. There are currently signs that the euro area's economic recovery is faltering. Data released on Friday showed that the euro area's CPI in August rose by 2.2% compared to the same period last year, a slight decrease from 2.6% in July. This is the lowest level since July 2021, in line with market expectations. At present, interest rate setters must balance two major risks. While energy prices have dragged down overall inflation, the inflation rate in the service industry remains high, policymakers are concerned that if they cut interest rates too quickly, service prices will continue to rise rapidly and prompt workers to demand higher wages by 2025 under the protocol. Another risk is that they cut interest rates too slowly, missing the opportunity to achieve a soft landing for the euro area economy.