Euro-zone June CPI unexpectedly holds steady

LONDON Consumer price inflation across the 17 countries that use the euro held steady in June compared with May, despite a bigger than expected slowdown in the pace of German price rises, data showed Friday.
The European Union's official statistics agency Eurostat said the flash estimate of the annual consumer price index in the euro zone rose 2.4% on the year in June, the same pace increase reported in May
That was higher than expected as economists surveyed by Dow Jones Newswires last week predicted a slowdown to 2.3%.
The June euro zone inflation outcome reflects a mixed picture across the euro zone, according to early indicators from Germany, Spain, Belgium and Italy
In Germany the CPI rose 1.7% in June, down from a 2.0% increase in May, while Belgian inflation also eased to levels last seen around two years ago
In Spain inflation held steady, rising 1.9% in June and the Italian CPI rose unexpectedly to 3.3% in June from 3.2% a month earlier
The steady pace of inflation between May and June will likely mean the European Central Bank will continue to keep interest rates on hold at 1.0% until they can be sure of an ongoing retreat in the pace of inflation over the coming months
However, inflation is now much closer to the central bank's target rate of around 2% and still gives them enough scope to introduce any additional policy measures aimed at improving growth in a region where gross domestic product was flat in the first three months of the year and is widely expected to have contracted in the second quarter
And, if inflation does show a further slowdown in the coming months, then the ECB may be more inclined to cut interest rates from the current 1%, and there has been growing evidence that some members of the governing council are becoming less averse to that option