FRANKFURT, April 3 Reuters Euro zone inflation fell unexpectedly last month, solidifying the case for the European Central Bank to start lowering borrowing costs from record highs.

Consumer price growth in the 20 nations sharing the euro currency slowed to 2.4 in March from 2.6 a month earlier, defying expectations for a steady rate as food, energy and industrial goods prices all pulled the headline figure lower.

Underlying inflation, closely watched by the ECB to gauge the durability of price pressures, meanwhile fell to 2.9 from 3.1, coming below expectations for 3.0, data from Eurostat, the EU39;s statistic39;s agency showed on Wednesday.

The only potential concern for the ECB will be that services inflation has been holding steady at 4.0 for months now, suggesting that relatively quick wage growth is keeping prices in the sector under constant pressure.

Inflation has been on a steady downward path for more than a year but has fallen more quickly since last autumn than many had predicted, shifting the debate to just how soon and how fast the ECB will unwind record rate hikes.

Meeting next week, the central bank is expected to acknowledge the improved outlook but policymakers are unlikely to cut rates straight away, having repeatedly pointed to June as the next crucial meeting for policy setting.

This is why investors see almost no chance of a cut on April 11 but have fully priced in a move for June, followed by another two or three steps later this year.

The ECB…