Consumer prices in France fell more than expected in September, statistics agency INSEE said on Tuesday, revising the annual consumer price index to 1.4%, strengthening the case for a possible cut in interest rates from the ECB this week.
EU-harmonised year-on-year inflation in the bloc’s second-largest economy fell to its lowest level since the start of 2021, down from 2.2% in August. INSEE had initially forecast a rate of 1.5% for September.
Price growth in the euro zone has been above the European Central Bank’s target for years, due to soaring energy costs, production bottlenecks after the pandemic reopening, of business opportunism and the abundance of tax assistance.
But a record series of interest rate hikes by the central bank brought price growth under control relatively quickly, and policymakers are now debating how quickly they should cut borrowing costs.
The ECB has already cut rates twice this year and a deposit rate cut of 3.5% on October 17 is almost fully priced in by financial markets, indicating that investors expect the bank is accelerating the pace of easing its policy.
