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Euro Inflation Pressures Ease

Inflationary pressures in the euro zone slipped further in December, according to an indicator from the Economic Cycle Research Institute (ECRI), designed to predict inflation trends, on Friday.

The Eurozone Future Inflation Gauge (EZFIG) dipped to 97.0 in December from 97.7 in November as inflationary pressures in Germany, France and Italy receded.

"In line with the cyclical downtrend in the EZFIG, euro zone inflation has eased from the highs seen earlier in 2011," said Lakshman Achuthan, ECRI's chief operating officer.

"With the EZFIG being pulled down by falling inflation pressures across Germany, France and Italy, euro zone inflation is likely to weaken further."

Euro zone inflation remained stable at 2.7 percent in January, preliminary data released earlier this week showed, off last year's peak and giving the European Central Bank more room to cut interest rates to help an economy battered by a debt crisis.

Financial markets expect the ECB will cut interest rates in March to 0.75 percent, from a record low 1.0 percent.

The euro zone will probably be mired in recession until the second half of the year, but even that assumes the region's sovereign debt crisis is contained.


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