Investing.com - Euro zone consumer price inflation for November was unexpectedly revised lower on Monday, adding to skepticism that the European Central Bank will be able to move ahead with an interest rate hike in 2019.
The bloc’s statistics agency Eurostat said that CPI rose 1.9% in November from the same month a year earlier.
Consensus had expected no change from the initial estimate of 2.0%.
Core inflation, which excludes energy, food, alcohol and tobacco prices, rose by an annual rate of 1.0%, unchanged from the preliminary estimate and in line with forecasts.
The ECB targets a headline inflation rate of close to, but just below 2%.
At its last policy meeting earlier this month, the ECB left interest rates on hold and confirmed plans to wind up its massive bond purchasing stimulus program. While no longer adding additional purchases to its €2.6 trillion ($2.96 trillion) four-year-long bond buying program, the monetary authority plans to reinvest principal payments from maturing securities “for an extended period of time past the date when it starts raising the key ECB interest rates”.
ECB president Mario Draghi indicated that the risks to the euro area growth outlook remained “broadly balanced”, but warned that the balance was “moving to the downside owing to the persistence of uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility.”
Despite the decision to halt the asset purchase program, markets have become increasingly skeptical about the ECB moving ahead with a rate hike in the coming year.
“With the end of the net-QE purchases, all eyes will be on the timing of the first rate hike,” ING economists commented. “However, given doubts about the strength of the Eurozone recovery and underlying inflation not gaining momentum, the ECB will take a very dovish stance, pushing the timing of a first deposit rate hike towards the end of the year. A refi-rate hike may not happen until 2020!”