Europe’s Inflation May Force ECB’s Hand

The euro area’s stubbornly low inflation could persuade the European Central Bank to cut its interest rates again, but analysts are divided whether it will actually do so when its governing council meets Thursday.

Some had been betting on a further reduction in borrowing costs this month given the worryingly low level of inflation in the 18 countries that share the euro.

But, for now, the spectre of deflation — the destructive spiral of falling prices in which consumers put off purchases, thus destroying salaries, jobs and investment — is being kept at bay, just.  The latest data compiled by the EU’s statistics agency Eurostat put area-wide inflation at 0.8 per cent in February, the same level as in January

Economic Times

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