German stocks rose on Wednesday, with the blue-chip DAX index up 0.46%. This comes as the eurozone's annual instantaneous inflation rate is just a few percentage points away from the European Central Bank's 2% target, potentially prompting policymakers to cut interest rates. Fee.
Eurostat's preliminary estimates put the region's annual inflation rate at 2.4% in March, compared with the previous month and the consensus estimate of 2.6%. Core inflation is also expected to fall to 2.9% from 3.1% in the same month.
“The euro area (EA) flash inflation in March was another positive signal for the ECB,” TS Lombard said in a note. “We are ready for a rate cut.” “ECB dovishists now have enough data for next week’s policy discussions to be far more lively than expected just a week ago (which is in line with our relative expectations for this meeting earlier this year). However, given the ECB's particular emphasis on wage statistics, especially since 2019, the March meeting has given rise to a subjective view that a rate cut will take place by June. The probability remains significantly below 50%.
Meanwhile, the euro zone unemployment rate in February was a surprise. The seasonally adjusted unemployment rate was 6.5%, unchanged from last month and above the consensus estimate of 6.4%. Eurostat estimates that the number of unemployed people in the region in February was 11.102 million.
“Wage growth has started to cautiously retreat, but remains high, and a tight labor market could add to this. As a result, inflation could fall more slowly than the ECB expected. And the central bank's own inflation expectations could fall again to 2% next year and 1.9% in 2026, although the labor market is unlikely to significantly delay rate cuts. We believe that continued tightening in the labor market will limit the extent to which the ECB can ultimately cut interest rates. This year, we expect a total of 0.75%. ” commented ING.
In company news, Rheinmetall 
RHM Booked an order for 104,000 mortar shells to be delivered to the Spanish Army. The order is worth a double-digit million euro and is expected to be delivered by the end of 2025. At the close of trading, the German car and weapons maker added 0.53% on the Frankfurt Stock Exchange.
