Eurozone inflation unchanged at 2.4%

Inflation in the 17 countries that use the euro was an annual 2.4 per cent in June, a figure that leaves the door open for a possible interest rate cut by the European Central Bank.

The figure was the same as in May and matched average market expectations.

Inflation has been gradually sinking in the eurozone thanks to a slack economy and lower oil prices, and the ECB expects it to fall to 2 per cent sometime next year. Mario Draghi, the head of the European Central Bank, said June 15 that there was no threat of inflation in any eurozone country.

That was a telling remark because the bank’s chief job is to keep inflation under control. Lower rates can stimulate growth but can worsen inflation, meaning the bank can only cut its benchmark refinancing rate if it can argue that inflation is under control.