Euro zone growth halves, inflation slows in spur for ECB

BRUSSELS: Euro zone economic growth halved in the second quarter and inflation slowed sharply in July, reinforcing market expectations that the European Central Bank will further ease monetary policy in September.
The European Union’s statistics office said on Wednesday that gross domestic product in the 19 countries sharing the euro grew 0.2 per cent quarter-on-quarter in the April-June period, down from 0.4 per cent in the previous three months and returning to the anaemic rates seen in the third and fourth quarters of last year.
Inflation, which the ECB wants to keep below, but close to, 2 per cent, also slowed to 1.1 per cent year-on-year in July from 1.3 per cent in June — the lowest reading in 17 months.
“We expect the ECB to respond to this broad-based economic weakness — which we think is likely to continue — with a round of extra policy easing, including restarting QE and cutting rates,” said Daniele Antonucci, economist at Morgan Stanley.
Core inflation, which strips out volatile unprocessed food and energy and which the ECB scrutinises in policy decisions, also fell to 1.1 per cent in July from 1.3 per cent in June. — Reuters