ECB likely to pursue rate-cutting cycle more cautiously
BRUSSELS
Eurozone inflation rose in December as energy prices slightly ticked up, official data showed on Jan. 7, which experts said will likely push the European Central Bank to pursue its rate-cutting cycle more cautiously.
Consumer prices picked up to 2.4 percent last month, up from 2.2 percent in November.
The ECB is still expected to cut interest rates at the next monetary policy meeting on Jan. 30, but with price pressures still present in the eurozone it will need to tread carefully despite the signs of economic weakness, analysts say.
"We project that the ECB will only cut rates once in the first half of this year, with additional cuts concentrated in the latter half of 2025," said Charlie Cornes, senior economist at U.K.-based Centre for Economics and Business Research.
December's rise comes after inflation in the 20-nation single currency area fell to a three-year low of 1.7 percent in September.
With weak economic growth, the ECB had turned its attention last year to cutting rates to combat the signs of weakness in the European economy.
In December, the ECB reduced its key deposit rate by a quarter point to three percent, its third cut in a row and fourth since June, when it kicked off its current easing cycle.
Experts warned they expected inflation to accelerate further, which would encourage more prudence from the ECB.
"A further increase in the first quarter looks likely. This will keep the European Central Bank on a cautious easing path," said Peter Vanden Houte, an economist at ING Bank.
