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"Euro-zone inflation has now passed its peak and is likely to fall further in the coming months "
- Nick Kounis, head of macro research at ABN Amro
Inflation in the euro zone declined for the first time since summer 2011, giving the European Central Bank room for more action. The inflation rate fell to 2.8 per cent in December from 3 per cent in November, said the European Statistical Office on Wednesday.
"Euro-zone inflation has now passed its peak and is likely to fall further in the coming months to levels clearly below 2 per cent in the second half of this year," said Nick Kounis, head of macro research at ABN Amro in Amsterdam. "The favourable medium-term inflation outlook is a green light for further ECB rate cuts over the coming months."
"This is the start of the slide," said Greg Fuzesi, economist at JPMorgan Chase. Mr. Fuzesi expects euro zone inflation to fall to the European Central Bank's 2% target by April.