Easing Inflation Points to Possible ECB Rate Cut

The latest release from Eurostat – the European Union's Statistics Office – suggests inflation eased slightly in December from the 3.0 percent recorded for the same month one year previously. Analysts feel that inflation could continue to decline giving rise to a growing expectation of a cut to European interest rates in the first quarter of the year.

“Assuming that the oil price does not rise again, we see this component knocking about 1 percent off the headline rate in 2012,” said Ben May, economist at Capital Economics. “Food inflation should also slow as the effects of past rises in agricultural commodity prices fade.”

Source: Reuters