The consumer price index in the euro zone fell to 2.4 percent on an annual basis, compared to 2.9 percent in October.
Expectations were that inflation in the single currency area would decline to 2.7 percent.
Matthew Landon, global market strategist at JP Morgan, said that the decline in the consumer price index sends a clear message, which is that inflation continues to decline at a rapid pace in Europe, “and more importantly, the pace is faster than market expectations or even the expectations of the European Central Bank,” according to His expression.
“Low inflation and a sluggish economy could justify the ECB’s rate cuts in the first quarter of next year in our view,” Landon said.
This November, European Central Bank President Christine Lagarde indicated that the ECB is not prepared to cut interest rates “during the next two quarters,” while she also warned of the possibility of a return of inflation.
The central bank raised interest rates 10 consecutive times to tame high consumer prices, but kept them steady for the first time in more than a year at its meeting in October.
With the inflation rate in the euro zone falling to 2.9 percent last October, and rising borrowing costs affecting the single currency area, speculation has increased about when the European Central Bank may start cutting interest rates.
Speaking at an event organized by the Financial Times, Lagarde sought to dispel hopes that this could happen anytime soon.
She added that if interest rates are maintained at their current levels “for a sufficient period,” this “will make a significant contribution to returning inflation to the 2 percent target in the medium term.”
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