Euro-region inflation (ECCPEMUY) slowed for the first time in five months in December, giving the European Central Bank room to lower borrowing costs further as the economy edges toward a recession.
The inflation rate (ECCPEMUY) in the 17-nation euro area fell to 2.8 percent from 3 percent in November, the European Union’s statistics office in Luxembourg said in an initial estimate today. Euro-area services and manufacturing output contracted less than initially estimated last month and French consumer spending unexpectedly declined in November from October, separate reports showed.
Europe’s economy (EUGNEMUQ) is showing increasing signs of a slowdown as governments struggle to contain the region’s debt crisis, adding pressure on the ECB to lower the benchmark interest rate from the current 1 percent, which matches a record low (EURR002W). Economists at IHS Global Insight and ABN Amro forecast the central bank will cut borrowing costs as low as 0.5 percent to fight a recession.
“Euro-zone inflation has now passed its peak and is likely to fall further in the coming months to levels clearly below 2 percent in the second half of this year,” said Nick Kounis, head of macro research at ABN Amro in Amsterdam. “The favorable medium-term inflation outlook is a green light for further ECB rate cuts over the coming months.”
The euro traded at $1.2981 at 12:45 p.m. in Frankfurt, down 0.3 percent on the day. The Stoxx Europe 600 Index declined 0.5 percent. U.S. Treasury 10-year securities fell for a second day, pushing yields up the most in a week.
This is definitely fab.It was kind of surprising,It looks good too,.,cheers!!
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