Euro zone government bond yields edged up on Thursday after inflation in the bloc hit 2 percent for the first time in four years last month, shooting past the European Central Bank's inflation target. Shilen Shah, Bond Strategist at Investec Wealth & Investment, said immediately following the announcement that, "Despite the European Central Bank hitting its 2% inflation target in February, it is likely to remain cautious on the sustainability CPI maintaining this rate". So-called core inflation, which strips out volatile price components such as food, energy, alcohol and tobacco prices, was measured at 0.9%, unchanged from January.
Energy prices were a massive 9.2 percent higher in February than the year before.
"An updated ECB forecast scheduled to be released next week will give an indication of where the central bank thinks CPI is likely to end up".
The inflation rate for the entire euro zone is expected to rise to 2.0 percent in February from 1.8 percent in January, economists polled by Reuters said.
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In January, Mr Draghi pointed to a new set of criteria arguing that the return to the ECB's inflation goal must be durable, self-sustained and representative of the euro area as whole. According to a survey of 3,000 companies by data firm IHS Markit, eurozone manufacturers raised their prices at the fastest rate in over 5 1/2 years during February as their costs jumped. Stimulus critics, however, have grown louder as the eurozone economy recovers and inflation nears the bank's goal of just under 2 percent. The lender has slashed interest rates and adopted a bond-buying program worth 2.3 trillion euros ($2.42 trillion) to pump money into eurozone economies.
The ECB is scheduled to run its quantitative easing bond-buying scheme until at least December and has pushed interest rates deep into negative territory to try to stimulate weak growth and hitherto stubbornly low inflation.
The ECB was also "very aware that there are appreciable uncertainties ahead, especially political ones", he said, citing elections in the Netherlands, France and Germany, the Brexit talks and the Trump administration.
As recently as May of last year, consumer prices were below their levels of a year earlier, and the 1% level was breached for the first time in more than three years as recently as December. The figure masks the fact that the number of unemployed people fell by another 56,000 during the month.