Eurozone's weakening inflation pressure is likely to provide further support to the case for additional monetary policy stimulus to boost the flagging economy, Capital Economics said Wednesday.
With core inflation pressures seen easing further over the coming months, and producer price inflation projected to remain muted, Eurozone's headline consumer price inflation could drop further below the European Central Bank's (ECB) 2-percent target.
However, with the majority of ECB Board members unwilling to implement further rate cuts or to take bolder steps into unconventional policy territory, such support appears unlikely to materialize in the near future at least, Capital Economics said.
According to the firm, core inflation in the currency bloc will likely continue to ease in the coming months, as the recent rise in non-energy goods inflation seems to be temporary, and was perhaps caused by seasonal factors like the timing of Easter
Data from the Eurostat Wednesday showed that Eurozone's consumer price inflation eased to a multi-year low of 1.7 percent in March from 1.8 percent in February, in line with economists' forecast. The drop was driven entirely by a sharp fall in energy inflation, which was partially offset by rises in both core inflation and services inflation.
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