BusinessDay: European Central Bank could cut rates to below 1% amid fears over euro slowdown EURO-zone inflation slowed for the first time in five months last month, beginning a slowdown economists expect will revive deflation fears and tempt the European Central Bank (ECB) to cut rates below 1% for the first time in its history. After the recent souring of the European and global economies, economists widely share the view that inflation has now peaked and predict a short, sharp slowdown in the months ahead to back below the 2% sweet spot the ECB judges to be optimal. Figures yesterday showed inflation in the 17-nation euro area fell to 2,8% from 3% in November, the European Union’s statistics office in Luxembourg said. The latest purchasing managers’ indices (PMIs) for the euro zone and several key individual countries suggested the region remained on track for a moderate recession despite a slight uptick in the data for last month. "The uplift in the euro zone PMI in December does little to dispel fears of the region sliding back into recession," Chris Williamson, chief economist at Markit, said yesterday. Read Full: BusinessDay - EU ‘on brink of recession’ as inflation hits new low
