Euro-zone inflation falls to 3.5-year low in September

Euro-zone inflation falls to 3.5-year low in September (Reuters)

Euro-zone inflation fell faster than expected in September to its lowest level since February 2010, signaling that the European Central Bank (ECB) can keep its loose monetary policy to help the bloc’s recovery. Consumer prices in the 17 countries using the euro edged down to 1.1 percent in September, compared with 1.3 percent in August. The latest inflation number was slightly below market expectations of 1.2 percent, the EU’s statistics office Eurostat said today. “We see no inflation risks,” said Christoph Weil, a European economist at Commerzbank. “There is no reason for the European Central Bank to act on inflation. It can stay with its expansionary policy,” The ECB will hold its rate-setting meeting in Paris on Wednesday and is expected to keep interest rates at a record low and leave them untouched for an extended period, if not give another rate cut. The euro zone’s September reading is below the ECB’s target of close to but below 2 percent. The bank projects inflation for all of 2013 to be between 1.4 percent and 1.6 percent.