Euro-area inflation eases as ECB approaches end of bond buying

(iStock)
(iStock)

Euro-area inflation eased off a six-year high just as the European Central Bank is set to pare back monetary stimulus and issue new macroeconomic forecasts.

Consumer prices rose 2% in November from a year earlier, down from 2.2% in October. A measure that strips out volatile components slipped to 1%, Eurostat said on Friday.

Although inflation has held near the ECB’s target of a little less than 2% for six months, that’s mostly the work of high energy costs. Still, President Mario Draghi and his peers have stuck to their plans to cap quantitative easing at €2.6trn ($3trn) at the end of the year.

Their decision on December 13 will be informed by updated projections for economic growth and inflation, which will allow them to better judge the implications of the most recent slowdown on the broader outlook.

The European Commission said on Thursday that economic sentiment in the region weakened for an 11th straight month in November as a soft patch in manufacturing has started to seep into consumer confidence. That’s an ominous sign for economic growth - already at a four-year low - in the final quarter.

Analysts have questioned whether the weaker momentum and turmoil in Italy could force a rethink on stimulus withdrawal, or warrant other support measures such as a new round of long-term loans. But Draghi maintained his view this week that some of the weakness is temporary, with policy makers expecting to focus their discussion in two weeks on how to reinvest existing debt when it matures.

Eurostat also released jobless data on Friday, which showed the unemployment rate held at 8.1% in October.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
17.49
(+0.90)
ZAR/GBP
22.83
(+1.35)
ZAR/EUR
20.54
(+1.13)
ZAR/AUD
12.50
(+1.28)
ZAR/JPY
0.16
(+1.63)
Gold
1914.41
(-5.61)
Silver
24.83
(-14.54)
Platinum
931.00
(-5.42)
Brent Crude
44.95
(+1.33)
Palladium
2081.07
(-6.36)
All Share
57168.24
(+0.72)
Top 40
52831.61
(+0.76)
Financial 15
10215.75
(+3.21)
Industrial 25
75524.64
(+1.14)
Resource 10
58677.82
(-0.46)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 960 votes
It depends on how the funds are used.
74% - 6389 votes
No. We should have gotten the loan elsewhere.
15% - 1317 votes
Vote