World News: Inflation Makes EU Rate Cut Less Likely
FRANKFURT -- Inflation in the euro zone rose sharply in March, pushing back expectations of a European Central Bank interest-rate cut even as economic sentiment softened and the bank pumped more funds into strained money markets.</br></br>Inflation in the 15 countries that share the euro rose to 3.5% in March from a year earlier, up from 3.3% in February and the highest since the series began in January 1997.</br></br>ECB policy makers have said rising food and energy prices will keep inflation above their preferred range of just less than 2% most of this year, but the March surge suggests inflation could stay higher longer than expected and spill over into wages and other prices.</br></br>Investors and many analysts now expect the ECB to defer a rate cut until September at the earliest, rather than June, as previously anticipated.</br></br>"The inflation news looks a whole lot worse than we'd expected; therefore, to get rate cuts as soon as June, the economic or financial situation has to deteriorate much more rapidly than we've seen," said Ken Wattret, an economist with BNP Paribas in London.