ECB rate cut possible as inflation stays unchanged

European inflation was unchanged in January, raising prospects that the ECB may cut the benchmark as low as 0.5% this year.

The inflation rate in the 17-nation eurozone was 2.7%, the same rate as in December, the European Union’s statistics office said yesterday. The ECB aims to keep inflation just below 2%.

Europe’s economy is showing signs of contraction as austerity measures across the region undermine consumer demand, making it more difficult for companies to pass on higher energy costs.