Euro zone inflation, growth slow as ECB hikes weigh

, their slowest pace since July 2021, a Eurostat flash reading showed, a time when the ECB was still worried about inflation getting stuck below its 2% target.

But the brisk decline from the double-digit figures of just a year ago is coming at a cost: the euro zone economyThe two sets of data mean the ECB is almost certainly done with raising interest rates, which are at record highs, and will now watch the effect of its an unprecedented streak of 10 straight hikes play out before making further moves.

But a measure of inflation that excludes energy, food, alcohol and tobacco also declined – to 4.2%, the lowest level since July 2022, from 4.5%. That measure is viewed by the ECB as a more accurate reflection of the underlying trend and is likely to cement its expectation that inflation will slowly head towards its 2% target by 2025.”It’s now down to weaker demand grinding down inflation and that’s a slow process,” Natixis’ Schumacher said.

It is a painful one too, with gross domestic product in the 20 countries that share the euro expected to continue contracting in the final quarter. “It does look like the economic environment is weakening at the moment, but no sharp recession is in sight either,” ING economist Bert Colijn said.

“Still, continued economic and geopolitical uncertainty alongside the impact of higher rates on the economy will weigh on economic activity in the coming quarters.”Banks should cut bonuses of staff failing to properly apply a new regulatory duty to put customers first as a cap on payouts comes to an end, Britain’s Financial Conduct Authority said on Tuesday.

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