The European Central Bank (ECB) is sticking to its guns on reducing inflation to 2% this year, even as Donald Trump’s return to the White House raises new uncertainty over global trade and economic stability.

The euro area annual consumer inflation rate for December was confirmed at 2.4%, its highest level since July, according to a second reading released Friday. Headline inflation accelerated from 2.2% in November, Eurostat data showed.

Eurozone inflation fell to 2.4% in December 2024, but ECB chief economist Philip Lane cautions that services inflation and uneven growth persist. A "middle path" on interest rates and structural reforms is crucial for stability.

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European Central Bank policymakers are likely breathing a sigh of relief that the new U.S. administration did not impose the blanket trade tariffs some had feared and a rate cut next week now seems like a done deal.

European shares traded higher on Thursday as benign U.S. inflation readings kept the door open for potential rate cuts by the Federal

Trump’s latest threat of 10% taxes on Chinese exports is far lower than the 60% he mulled at one point last year. As a result, measures of expected inflation including breakeven rates and swaps have fallen, while a gauge of future volatility in rates markets dropped from a seven-week high.

Inflation in Luxembourg in December stood at 1.6%, according to Eurostat, an increase of half a percentage point from the previous month

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Increasing transport prices boosted Spain’s December inflation number, with rising culture and recreation prices also contributing to the figure.

The annual inflation rate for housing and household services was 6.0% in December 2024, up from 5.8% in November. This compares with a recent peak of 11.8% observed in January and February 2023. On a monthly basis, prices rose by 0.4% in December 2024, compared with a rise of 0.3% a year ago.

The European Central Bank is “not overly concerned” by the impact of inflation abroad on the bloc, the institution’s President Christine Lagarde told CNBC.