Another interest rate cut in Europe could be just around the corner as the risk of deflation rears its ugly head again.
The first official estimate of eurozone inflation in January was a weaker-than-expected 0.7% — the same level that prompted the European Central Bank to cut rates in November. Consumer prices rose by 0.8% in December.
The weaker January number “puts significant pressure on the ECB to take further stimulative action at its February policy meeting next Thursday,” said IHS Insight’s chief European economist Howard Archer. Cheaper energy was largely to blame, but the stronger euro has also been pulling import prices down, economists said.