World Bulletin / News Desk
Euro zone inflation held steady at a 16-month low in June, kept in check by a sharp fall in oil prices and supporting an already strong case for a near-term interest rate cut by the European Central Bank.
Consumer prices in the 17 countries sharing the euro rose 2.4 percent year on year in June, EU statistics office Eurostat said on Friday, the same rate as in May and as expected by economists in a Reuters poll.
The ECB left rates at a record low of 1 percent earlier this month. But many economists expect it to cut borrowing costs at its July 5 meeting, taking place against a darkening economic backdrop and after EU leaders agreed new crisis measures overnight to tackle the region's debt crisis.
"There is no obstacle to an ECB rate cut from the side of inflation," said Christoph Weil, an economist at Commerzbank, who expects a cut next Thursday.
A Reuters poll showed that 48 out of 71 economists expect the ECB to cut rates, in theory making it cheaper for the euro zone hard-pressed households and firms to borrow.
ECB President Mario Draghi has so far argued that it is up to governments - not the bank - to take steps to help calm the crisis that has intensified in recent weeks as Spain and Cyprus have become the fourth and fifth countries to seek a European rescue.
But the pressure appeared to be back on the ECB after euro zone leaders agreed in the early hours of Friday to take action to try to bring down Italy and Spain's borrowing costs and to create a single supervisory body for euro zone banks.
Data also showed on Friday that loans to euro zone households and companies shrank in May as banks have tightened credit requirements, meaning less money is easily available to revive the depressed economy.
"The monetary data released earlier today by the ECB... reinforce the view of moderate inflation over the medium term," said Martin van Vliet at ING.
"The prospect of moderate inflation allows the ECB room for manoeuvre to cut its main policy rate further."
Another, less likely option for the ECB would be to provide more cheap long-term refinancing operations (LTROs), repeating a two-stage move that calmed markets early this year with over a trillion euros in loans.
Oil at $90 a barrel
An interest rate cut would not on its own do much for the economy, which only narrowly avoided sinking into recession in the first three months of this year, but the weak economy in turn ensures hidden inflation dangers are minimised.
"Sluggish economic prospects will limit wage, cost and price pressures," said Clemente de Lucia at BNP Paribas. "The unemployment rate has reached its highest level since the launch of the euro and, under the current economic environment, labour market conditions will continue to deteriorate."
After months of unexpectedly high consumer price pressures at a time when euro zone economies were stagnating, inflation dropped from 2.6 percent in April as world oil prices fell.
In an abrupt change of course, Brent crude - trading above $120 a barrel earlier this year - is now just above $90 and on track for its worst quarterly performance since the 2008 financial crisis.
Concerns among businesses and investors that the euro zone's 2-1/2 year debt crisis is no closer to any lasting resolution has started to eat away at the resilience of the U.S. and Chinese economies, stifling global growth and hitting oil.
"A rate cut will not prevent a deep recession in the euro zone," said Ben May, an economist at Capital Economics. "After all, the drop in the oil price is probably largely as a result of the recent run of weak global economic data and growing fears that Spain requires a full sovereign bailout."
Listed shares in BIST 100 rise 0.01 percent; US dollar/Turkish lira rate climbs over 3.90; EUR/TRY stands at 4.80
Turkey bridges Muslim world and West, according to General Council for Islamic Banks and Financial Institutions
Britain intends to seek free trade deals with its major trading partners once it leaves the EU, as planned, in March 2019.
Net profits at the group rose 33.1 percent to hit 2.36 billion euros ($2.92 billion), higher than the 2.28 billion predicted by analysts.
About 45 minutes into trading, the Dow Jones Industrial Average was at 24,867.00, up 0.4 percent.
Low-cost carrier to offer direct flights to Dalaman from Dublin and Bratislava starting June
"Preliminary national accounts results for 2017 show an increase of 7.8 percent in GDP... compared with 2016," Jennifer Banim, an assistant director general at the Central Statistics Office (CSO), said in a statement.
Unemployment rate falls 2.3 percentage points year-on-year in December to 10.4 pct
"It is time to forget about ideological trench warfare," Francois Villeroy de Galhau told a Frankfurt conference.
In January, euro area and EU28's industrial production drops in January compared to previous month, Eurostat says
In a statement, Siemens said it had signed an accord with APEX, Brazil's Trade and Investment Promotion Agency, committing to a string of projects to "unleash a new cycle of sustainable growth" in the country of 207 million people.
The US supply increase is expected to come as the Organization for Petroleum Exporting Countries, dominated by oil giant Saudi Arabia, works with Russia to slash output after prices for crude plummeted to around $30 per barrel in 2016 from over $100 two years earlier.
Emerging trends, challenges and business opportunities in Islamic finance industry will be discussed during 2-day event
BIST 100 rises 0.05 percent, US dollar/Turkish lira exchange rate stays put, euro/lira exchange rate goes up
Turkey and Sudan can build joint industrial zones, says Turkish technology minister