Traders see a 98% chance of a quarter-point reduction by the European Central Bank. The Federal Reserve has paused.

A broader move toward European rearmament would represent "a debt-financed fiscal expansion that would spur economic activity, allow some reflation, and cause the ECB to reconsider the extent of its policy rate cuts going forward," Thierry Wizman, global FX and rates strategist at Macquarie, said Tuesday.

Inflation in Europe eased to 2.4% in February, supporting the case for another interest rate cut from the European Central Bank but leaving open how far the central bank will go in lowering borrowing costs.

For four years, the ECB has been trying to slow the economy down, raising its key deposit rate to a record 4 percent to choke off inflation, before gradually lifting its foot off the brake since June. Next week’s expected rate cut will be the sixth in the current sequence, and will bring the deposit rate down to 2.5 percent.

The European Central Bank (ECB) is set to deliver a sixth interest rate cut in a move that will benefit about 130,000 householders with tracker mortgages.

Consumer prices in the eurozone were 2.4% higher in February than a year earlier, a slower rate of inflation than recorded in January, reassuring policymakers ahead of Thursday’s meeting.

Euro zone inflation dipped a bit less than expected last month but its most closely watched component also dropped, sealing the case for another ECB interest rate cut on Thursday and solidifying bets for further policy easing in the coming months.

Euro-area inflation eased, boosting confidence that it’s approaching the 2% target as the European Central Bank enters the last leg of interest-rate cuts.

Eurozone inflation eased to 2.4% in February but remained above forecasts, complicating the ECB’s rate-cut plans. Monthly price pressures, meanwhile, hit a 10-month high. View on euronews