Eurozone inflation ticks back up ahead of ECB meeting next month
Said Pierdomenico/bloomberg Ecb Council They Alessia Economic Member Should Longer Panetta So Fabio No Curb Be Picture: Cut Rates Growth Interest
The inflation rate across the eurozone edged up slightly to 2% during October, with price increases in the services sector being the main driver, new data from Eurostat shows.
This comes as the European Central Bank (ECB) is due to meet on December 12 to decide whether to cut interest rates for a fourth time this year. Rate cuts of 0.25% were already announced in June, September, and October, with one further cut widely expected before the end of the year.
The ECB’s target is to get inflation down to 2% over the medium-term.
According to Eurostat, inflation across the eurozone increased slightly from the 1.7% recorded in September. When the wider EU is included, October’s inflation rate increased to 2.3% — up from 2.1%.
The highest annual rates were recorded in Romania, at 5%, followed by Belgium and Estonia, both at 4.5%.
Slovenia recorded 0% inflation during the month, while Lithuania and Ireland both recorded 0.1%.
Eurostat said the highest contribution to the annual euro area inflation rate came from services, up 1.77%, followed by food, alcohol and tobacco up 0.56%.
On the forthcoming decision on interest rates, ECB policymaker and Bank of Italy's governor Fabio Panetta said interest rates should be cut so they no longer curb economic growth, or so they even stimulate it.
Mr Panetta's comments bring into the open a growing debate within the ECB about how far the eurozone's central bank should cut rates at a time when inflation is close to the bank's 2% target, and economic growth is stagnating.
He said the ECB needed to "focus on the sluggishness of the real economy" and move official interest rates into "neutral, or even expansionary, territory".
"With inflation close to target and domestic demand stagnant, restrictive monetary conditions are no longer necessary," he said in a speech at Milan's Bocconi University, adding inflation could fall well below target in the absence of a sustained recovery.
"A scenario that would be difficult for monetary policy to counteract and should therefore be avoided," he said.
On Monday, governor of the Central Bank of Ireland Gabriel Makhlouf said the decision on whether to cut rates again would be dependent on data presented right before the meeting.