I dare say the ECB’s out of the woods on inflation, or damn near.

I can be so bold because no one’s going to hold me to it. With apologies to the analysts and “strategists” whose job it is to opine on inflation trends in Europe, nobody cares. So, if I’m wrong and inflation picks back up again across the pond, nobody’ll remember I suggested otherwise.

On Tuesday, Eurostat said headline inflation probably ran 2.2% across the bloc in March, down from February and the slowest since November. Core slipped to 2.4%, the coolest in more than three years.

There’s the chart, and I gotta tell you: If you showed that to Christine Lagarde in 2022 and said “This is how it’ll end up,” she’d have said “I’ll take it!”

Clearly, inflation’s return to target in Europe has less to do with monetary policy and more to do with the waning of pandemic distortions and, even more importantly, the fading of war effects. All the same, Lagarde can say she presided over the most aggressive tightening campaign in the short history of the ECB, then pivoted to cut rates six times as inflation moderated, with the end result being 2.2% headline inflation, 2.4% core inflation and a depo rate that’s more or less neutral. Not too bad.

But there’s no rest for the weary and the ECB’s now tasked with managing a macro outlook clouded by Donald Trump’s trade war and the cost of rearmament. Do note: Germany’s game-changing fiscal pivot’s likely to push up borrowing costs for financially weaker sovereigns, and there’s still nothing like unanimity on collective debt issuance in the service of building a pan-European fighting force.

I continue to believe the ECB will at some point be compelled to assist in the rearmament effort by leveraging its balance sheet to ensure the cost isn’t prohibitive and doesn’t fiscally imperil nations who might otherwise have a hard time financing defense expenditures.

Tuesday’s data showed services inflation across Europe ran just 3.4% in March. That’s very good news, with the caveat that some of the moderation’s down to slower demand.

ING’s Bert Colijn said there’s a calendar effect in play. “Weak services inflation is in part due to an Easter effect as the holiday falls late this year [which] usually results in softer services inflation in March and a bounce back in April,” he said. “Then again, businesses in the service sector have seen selling price expectations soften and indicated weakness in business activity in recent months, so a return to a lower inflation trend seems in the making regardless of short-term Easter effects.”

In any event, the ECB can squeeze in another cut if they want. That was the message from Tuesday’s inflation figures. Hawks on the GC are worried about inadvertently cutting below neutral (i.e., accidentally stumbling into stimulative policy settings when inflation’s not quite snuffed out), but I think it’s a stretch to suggest 2.5% is the low-end for neutral in Europe, which is effectively what you’re arguing if you say another rate cut’s somehow a risk too great to take.

Oh, and Eurostat also said Tuesday that euro-area unemployment in February was 6.1%, a new record low.