ECB rate cut more likely as inflation holds steady

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ECB rate cut more likely as inflation holds steady

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Eurozone inflation in February was at its lowest level since mid-2010, thanks to lower price pressure from food, alcohol and tobacco.

Annual consumer inflation in the seventeen countries sharing the euro was one point eight percent, the EU’s statistics office said, confirming its initial estimate from two weeks ago.

That matches the European Central Bank’s target of below but close to two percent

Along with modest wage growth at the end of last year that give the ECB room for an interest rate cut.

The ECB kept interest rates at 0.75 percent at its March 7 meeting and while there is scepticism about the impact of another cut, because commercial banks are reluctant to lend, economists argue a rate cut would send a positive sign.

Already in recession in 2012, the eurozone economy is expected to shrink 0.3 percent this year as households and businesses struggle with the fallout of the bloc’s public debt crisis and government spending cuts.