Market Outlook: Rising Inflation in Eurozone Won't Halt ECB's Rate Cuts in December

According to Commerzbank economist Vincent Stamer, despite the rise in Eurozone inflation in November, it is unlikely that the European Central Bank will refrain from reducing interest rates next month. The increase in inflation from 2.0% in October to 2.3% in November was attributed to a base effect due to the decline in energy prices a year earlier. Stamer stated that without this effect, inflation would have hardly increased. In September, the ECB was still assuming that inflation would be 2.6% in the fourth quarter; however, according to Commerzbank's calculations, inflation is likely to be around 2.3%. Stamer noted, "As a result, the central bank will think that the inflation issue is under control," and he expects a quarter-point rate cut in December.