Inflation in the 17-nation euro area remained at 3 per cent for the third consecutive month in November, according to a first estimate, suggesting the European Central Bank may have to consider delaying a further interest rate cut.
The European Union’s statistics office Eurostat said in a statement on Wednesday that consumer prices rose by 3.0 per cent in November, the same rate as in September and October and in line with the average of forecast in a Reuters poll.
Many economists expect the ECB to cut rates soon to support the weakening European economy, as the region’s debt crisis saps business confidence and raises the spectre of another recession.
But stubbornly high inflation, above the Frankfurt-based central bank’s target of close to but below 2 per cent, means it may hold off. Its next meeting is on Dec. 8.
The ECB increased rates to 1.5 from 1.0 per cent in two steps – in April and July – but pulled them down to 1.25 per cent in November.
Economists polled by Reuters on Tuesday saw a 60 per cent chance of the ECB cutting rates to 1.0 per cent next week.
With the pan-European economy slowing sharply, and with some analysts expecting it to have entered recession in the last quarter of this year, prices are expected to be capped and could fall rapidly, pulling inflation down.
In a separate release, Eurostat said the jobless rate in the euro zone inched up to 10.3 per cent from 10.2 per cent in September.