Eurozone inflation stuck at 3 pct in November

BRUSSELS (AFP) -- Eurozone inflation hit 3.0 percent for the third month running in November, official data showed on Wednesday, but analysts expect the European Central Bank to slash its main rate due to the debt crisis.

The ECB, the guardian of euro price stability, wants to keep inflation below 2.0 percent but any action when bank governors meet on December 8 could be driven by concerns about a looming eurozone recession.

Although the Eurostat data agency said inflation stood at 3.0 percent in November, economists expect the ECB to cut its benchmark rate by 0.25 points to 1.0 percent in light of the worsening crisis.

“Although Eurozone consumer price inflation remained up at 3.0 percent in November, there is a very strong case for the ECB to cut interest rates again at its December 8 policy meeting," said Howard Archer, chief economist at HIS Global Insight.

The ECB had already cut its rate to 1.25 percent earlier in November, just five months after having raised it to 1.50 percent.

With banks in desperate need of liquidity, analysts say the ECB can afford to cut the rate because inflation is expected to ease to 2.0 percent in 2012.

“All in all, the current and foreseeable downturn in economic conditions will probably significantly ease pressures on wages, costs and prices, increasing downside risks to price stability," said Clemente De Lucia, economist at BNP-Paribas.