- Thilo Heidrich, an economist at Deutsche Postbank AG
Price pressure in the 17-nation economy eased further last month, as steeper price increases for services offset an easing in energy costs, the European Union's statistics office said Wednesday. Annual price growth in the Eurozone stood at 1.7% in March, down from 1.8% a month earlier, moving below the European Central Bank's 2% ceiling for the second consecutive month. At the same time, prices in food, alcohol, and tobacco recorded the highest rate of inflation at an estimated 2.7%, matching previous month's reading. The Eurozone economy contracted for five quarters in a row, and latest data are highlighting the weakness of region's economy, adding to concerns that it may shrink in the first three months of 2013.
"On paper, you could say there's room for an interest-rate cut," said Thilo Heidrich, an economist at Deutsche Postbank AG (DPB) in Bonn. "On the other hand, you could say that would achieve nothing and would only use up some ammunition in case the debt crisis really worsens."
"The Eurozone economic confidence recovery has stalled, renewed financial-market tensions are, and will be, a drag," Schulz said. "The delayed recovery means that a rate hike is unlikely before the second quarter of 2014."
© Dukascopy Bank SA