Eurozone inflation unexpectedly holds steady November

Eurozone inflation rose 0.1% in the year to November, unchanged from the previous month, according to the 'flash' estimate from Eurostat on Wednesday.

Analysts had predicted year-on-year growth of 0.2%, adding pressure on the European Central Bank ahead of its policy decision on Thursday. The ECB is targeting inflation of just below 2%. Eurostat said an increase in food, alcohol and tobacco was offset by a continued fall in energy prices.

ECB President Mario Draghi is expected to announce new measures to counter prolonged low inflation, including an increase in monthly asset purchases, an extension to the quantitative easing programme beyond September 2016 and a cut to the deposit rate.

"November’s weaker-than-expected Eurozone consumer prices figures give a final green light for the ECB to both increase the pace of its asset purchases and cut its deposit rate at tomorrow’s policy meeting," said Jonathan Loynes, chief European economist at Capital Economics.

Core inflation, which excludes volatile items such as energy and food, rose 0.9% year-on-year in November. It was down from 1.1% in October, missing expectations for no change.

"A dovish report, which will add weight to the ECB doves’ argument for more easing tomorrow, and also increases the risk of a more aggressive policy response. The fall in core inflation is very unlikely to mark the start of a downward trend, and we continue to see upside risks in the next six-to-12 months," Pantheon Macroeconomics said in a research note sent to clients.

As of 10:56 euro/dollar was lower by 0.32% to 1.0590.