According to data released by Germany's Federal Statistical Office on January 6, the consumer price index (CPI) for December rose by 2.6% year-on-year, surpassing the market forecast of 2.4%, and up from 2.2% in November. After the data was released, the euro remained relatively stable against the US dollar, currently trading at 1.0411. The yield on two-year German government bonds rose by 4 basis points to 2.2%. As a result, market expectations for a significant interest rate cut by the ECB have weakened. The unexpected rebound in inflation in Germany suggests that the ECB may need to maintain a more cautious stance on rate cuts, particularly as factors such as rising public transport fares and higher carbon emission prices are expected to continue pushing inflation up, especially ahead of the upcoming snap elections. This election could expedite the end of Chancellor Olaf Scholz’s tenure.