A rebound in the euro late last summer, coupled with further falls in the price of oil, partly explains a slowdown in euro zone inflation, the European Central Bank said.
Consumer prices in the euro zone dipped 0.1 percent in September and were flat in October, despite a 60-billion euros a month asset-purchase programme that the ECB launched in March with the aim of reviving inflation.
“Some of the loss of momentum in the pick-up in underlying inflation can be attributed to a recent strengthening in the euro exchange rate and the indirect effects of recent further declines in oil prices,” the ECB said in its Economic Bulletin on Thursday.
The ECB is considering fresh policy steps, possibly including a cut to its deposit rate, and is set to make a decision on the matter at its next meeting in early December, the bank said at its October meeting.
The euro has lost ground against the dollar since the announcement, with prospects of a U.S. rate rise next month also weighing on the common currency.
The ECB also warned about the indirect impact on the euro zone of China’s economic slowdown via household confidence and investment flows, it said in an article from the bulletin that was pre-released on Tuesday.
