Germany's inflation rate drops to 2%, economic recovery pace slow at the beginning of the year.

Germany's inflation rate unexpectedly fell to the target level of the European Central Bank, with the pace of economic recovery slowing at the beginning of 2026. The German statistics office announced on Friday that consumer prices rose by 2% year-on-year in February, lower than the 2.1% increase in January. Economists had expected this data to remain stable. Despite signs of recovery in the German economy after years of stagnation, the German central bank considers its momentum to be weak. Fiscal stimulus policies are expected to have a more noticeable effect starting in the spring and to drive economic growth to at least 1% this year, helping to stabilize the inflation rate at 2%. European Central Bank policymakers have expressed satisfaction with the inflation rate in the euro area and the level of borrowing costs. Economists predict that interest rates will not be adjusted until at least the end of next year, despite current inflation rates being below the target. The euro area will release inflation data next Tuesday, with analysts expecting it to be 1.7%.