Eurozone inflation ticks up, pointing to steady ECB rates

Inflation in the 20 nations sharing the euro accelerated to 2.2 per cent from 2.1 per cent a month earlier

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Eurozone inflation unexpectedly ticked up last month, likely solidifying bets that no further European Central Bank rate cuts are coming anytime soon, data from Eurostat showed on Tuesday.

Inflation in the 20 nations sharing the euro accelerated to 2.2% from 2.1% a month earlier, hovering near the ECB’s 2% goal for most of this year, as falling energy prices offset still robust domestic price pressures, particularly in services.

Underlying figures, which exclude volatile food and fuel prices held steady at 2.4% on continued quick price growth in services but muted figures for durable goods.

The figures confirm the ECB’s own view that inflation is largely defeated and policymakers now have ample time to watch price developments unfold before contemplating any further action.

This is why markets see almost no chance of a cut in the ECB’s 4% deposit rate at the bank's last meeting for the year on December 18 and see only a one-in-four chance of any easing next year.

The ECB has cut rates by a combined 2 percentage points in the year to June but has been on the sidelines ever since.

Rate cut talk may get a new lease on life early next year, however, when inflation is set to dip below target on the continued fall in energy costs.