RTTN:Eurozone Inflation Remains Unchanged In June, Still Above Target
(RTTNews) - Eurozone annual inflation remained unchanged at 2.4 percent in June, flash estimate released by Eurostat showed Friday. Though the rate remained comfortably above the central bank's target, the European Central Bank feels that there is no inflation risk at present in the euro area.
The June inflation rate was the lowest since February 2011 and was in line with economists' expectations. The statistical office is slated to publish the final data on July 16.
"Although Eurozone consumer price inflation was only stable in June, it is evident that the underlying trend is down and that the conditions are in place for a marked dip over the coming months," said Howard Archer, Chief UK and European Economist at IHS Global Insight.
There are mounting signs that underlying price pressures are easing in the Eurozone in reaction to weakened economic activity and high and rising unemployment," Archer noted.
The central bank has set an inflation target of 'below, but close to 2 percent.' The ECB, in its latest monthly bulletin, said that inflation rates are set to stay above 2 percent for the remainder of 2012.
That said, the central bank has been repeatedly stating that there is no threat of inflation in euro area.
Speaking at a conference Frankfurt, ECB President Mario Draghi said that inflation expectations in the region remained well anchored and there was no inflation risk in any of the euro area countries.
The central bank retained the key interest rate unchanged at 1 percent at this month's governing council meeting, but is widely expected to cut rate next month given the weakness in the economy.
In a recent interview, ECB Executive Board Member Benoit Coeure said a rate cut was discussed at the previous governing council meeting and the next council may also discuss it.
Earlier this month, the International Monetary Fund urged the ECB to ease policy further, given the waning inflation risks and the severity of the current economic situation in the region.
"With inflationary pressures expected to weaken substantially, the ECB has room, albeit limited, to ease policy rates and signal a commitment to a more accommodative stance for a prolonged period," the Washington-based lender said in a review report of the single-currency bloc.
