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EA Disinflates March’s Excess

• Euro area inflation slightly undershot consensus expectations in March, consistent with the correlation of surprises and energy prices. Yet it was 7bps above our forecast.
• Services prices drove core inflation down to 2.4%, creating some dovish space. However, the headline outcome reversed last month’s upside to match February forecasts.
• Resilience in the real economy still justifies more cautious easing close to neutral, so we expect graduated cuts to skip April for June, but the risk of an extra cut has risen.

By Philip Rush

HEM: Fear of Fear Itself

• Fear of tariffs and DOGE is depressing vibes in US surveys
• Resilient labour markets suggest dovish fear is overblown
• Underlying price and wage inflation remains too high
• Paused easing cycles do not resume without recessions
• Reversing unnecessary easing remains more likely in 2026