A fall in euro zone inflation to a three-year low strengthens the case for a rate cut by the European Central Bank

Euro zone inflation has fallen to its lowest level since mid-2021, reinforcing the case for another interest rate cut by the European Central Bank.

The consumer price index (CPI) rose 2.2 per cent in August from a year earlier, down sharply from 2.6 per cent in July and in line with the median estimate of analysts surveyed by Bloomberg, according to data released Friday by Eurostat.

Core inflation, which strips out volatile factors such as food and energy, also slowed to 2.8%, in line with economists' expectations, from 2.9% in the previous three months, Bloomberg reported.

Investors are betting the ECB will cut interest rates two or three more times this year and do more in 2025.

However, Friday's data showed a further tightening of the labor market, with the eurozone unemployment rate unexpectedly falling to 6.4 percent.

Euro zone inflation has fallen to its lowest level since mid-2021, reinforcing the case for another interest rate cut by the European Central Bank.

The consumer price index (CPI) rose 2.2 per cent in August from a year earlier, down sharply from 2.6 per cent in July and in line with the median estimate of analysts surveyed by Bloomberg, according to data released Friday by Eurostat.

Core inflation, which strips out volatile factors such as food and energy, also slowed to 2.8%, in line with economists' expectations, from 2.9% in the previous three months, Bloomberg reported.

Investors are betting the ECB will cut interest rates two or three more times this year and do more in 2025.

However, Friday's data showed a further tightening of the labor market, with the eurozone unemployment rate unexpectedly falling to 6.4 percent.