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Inflation in the euro area rose from 1.7% to 2% in October, flash figures showed Thursday, coming in slightly higher than the 1.9% forecast.
Core inflation and services inflation were both unchanged on the previous month.
Markets currently expect the European Central Bank to cut interest rates by another 25 basis points in December, with one analyst saying the latest data would end debate over whether a larger 50-basis-point cut is warranted.

Line-up of pumpkins in the Netherlands, on Oct. 27, 2024.
Nurphoto | Nurphoto | Getty Images

Inflation in the 20-nation euro zone rose to 2% in October, preliminary figures released by statistics agency Eurostat showed Thursday.
Economists polled by Reuters had forecast a headline figure of 1.9%. The September headline reading was revised down to 1.7% from 1.8% on Oct. 17, below market expectations.

The biggest upward pull in the headline rate came from food, alcohol and tobacco, where price rises accelerated to 2.9% from 2.4%.
Core inflation, which excludes those volatile components along with energy prices, was unchanged at 2.7%, slightly higher than the 2.6% expected. Services inflation — an important gauge of domestic price pressures — also held steady at 3.9%.

The euro was up 0.15% against the U.S. dollar following the release, trading at a two-week high of $1.087.
The fresh Thursday inflation print was seen as crucial in judging whether the European Central Bank could consider implementing a jumbo half-percentage-point cut in interest rates at its next meeting in December.
The central bank has so far trimmed rates three times this year, in quarter-point increments that altogether took the central bank’s key rate from 4% to 3.25%.

Markets are currently pricing another 25-basis-point reduction in December.

Euro zone growth

Traders are also considering the latest growth figures for the euro area, which showed better-than-expected 0.4% expansion in the third quarter, even as analysts predicted further weakness ahead.
The ECB said during its October meeting that the process of disinflation was “well on track” and that sluggishness in the euro zone’s economic activity had added to its confidence that inflation will not resurge dramatically.
“Hotter eurozone inflation, stronger growth and record low unemployment wipe out bets for a 50 [basis point] cut,” Kyle Chapman, foreign exchange market analyst at Ballinger Group, said in a note.
Chapman said that, while an uptick in consumer price growth was expected toward the end of the year, services inflation remained sticky.
“A big concern underpinning the risks of inflation undershooting the target was a potential tipping point with the labor market, the surprising resilience of which could be at risk of a sharp unwind in labor hoarding if consumption worsens. That concern is no longer so significant,” Chapman stressed, pointing to this week’s growth and employment figures.
“Back-to-back 25 [basis point] moves are the way to go. The need for below-neutral rates to rescue a contracting eurozone economy is fading from the discussion, and that negates the need to hurry the easing cycle, particularly with services inflation struggling to come unstuck.” More

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BENGALURU (Reuters) -Global economic growth will maintain its robust pace next year as major central banks implement a series of interest rate cuts against the backdrop of a strong U.S. economy, according to a Reuters poll of around 500 economists.Next week’s hotly-contested U.S. presidential election could limit the growth picture, however, by re-writing the current rules around trade.Unexpected resilience that led economists to significantly upgrade their 2024 global growth forecasts since the beginning of the year is in large part thanks to the U.S. economy’s performance.Inflation has also fallen sharply, with most major central banks now managing price pressures within striking distance or already at their respective targets. Global growth was expected to average 3.1% this year, a steep upgrade from 2.6% in a January poll, also up from 2.9% in April and steady compared with a poll three months ago.The world economy’s rate of expansion is expected to broadly hold up at 3.0% next year, according to a Reuters poll taken Sept. 30 – Oct. 30 covering 50 important economies.While there were widespread fears earlier this year the U.S. economy would run into trouble from the effects of the highest interest rates in more than two decades, its resilience has consistently surprised economists and markets.”I think there’s still a U.S. outperformance theme — certainly versus the euro zone and the UK,” said Ross Walker, head of global economics at Natwest Markets, looking ahead into next year.Gross domestic product (GDP) growth in the world’s largest economy, last reported at 2.8% and driven by strong consumer spending, was expected to average 2.6% this year and 1.9% in 2025.The U.S. economy has not only outpaced all of its G10 peers but also grew at nearly twice the rate economists had predicted at the start of the year. Its stock markets are trading near record highs, in part from money flowing in from abroad.STRENGTH FROM ASIAOther strong spots are India, the fastest-growing important world economy, as well as broad resilience in Asia.Japan has had strong enough output recently to take small initial steps aiming at exiting decades of extraordinarily easy monetary policy.Even Argentina’s beleaguered economy is set to rebound next year.But policymakers managing No. 2 economy China are having to resort to aggressive monetary stimulus and an expected set of fiscal stimulus worth $1.4 trillion to meet Beijing’s 5% growth goal, a target already behind pre-pandemic performance. For the bulk of world economies where rates are falling, those rates are more likely to go lower than forecast than higher, the survey found, further underpinning a solid global outlook. A majority of respondents who answered a separate question, 147 of 255, said interest rates for the central banks they cover were more likely to end 2025 lower than forecast rather than surprise higher.But in the U.S. a two-thirds majority, 33 of 40, said the federal funds rate was more likely to be higher, owing to continued strong economic performance and possible renewed inflation pressure. “I look at the U.S. economy…at the macro data, the labour market, and of the major economic regions, it seems to me it is the one least in need of aggressive interest rate cuts,” added Natwest’s Walker.U.S. ELECTION THE WILD CARDIf elected, Republican candidate Donald Trump plans to impose sweeping tariffs on imports from every country, which economists say carry serious downside risks. “Republican proposed polices on tariffs – ranging from 10% baseline to targeted tariffs – should be taken seriously, in our view, given broad presidential discretion on trade policy,” noted economists at Morgan Stanley.”In the U.S., broad tariffs imply downside risks to growth, through declines in consumption, investment spending, payrolls, and labor income. We estimate a delayed drag of -1.4% to real GDP growth, with headline PCE (personal consumption expenditures) prices rising 0.9% more rapidly.”Among U.S. economists surveyed, an overwhelming majority, 39 of 42, said Trump’s policies would be more inflationary than those proposed by Democratic candidate Vice President Kamala Harris.Both candidates are proposing economic policies that will drive up an already staggering U.S. fiscal deficit.(Other stories from the Reuters global economic poll)(Polling, analysis and reporting by the Reuters Polls team in Bengaluru and bureaus in Buenos Aires, Cairo, Istanbul, Johannesburg, London, Shanghai, and Tokyo; Editing by Ross Finley and Philippa Fletcher) More

BENGALURU (Reuters) – Most Asian central banks will cut interest rates slower than the U.S. Federal Reserve over the coming year, Reuters polls showed, as solid growth has eased pressure to maintain currency stability against a persistently strong dollar.A jumbo 50 basis points Fed rate cut in September and expectations for two more quarter-percentage point reductions by end-year has provided wriggle room for central banks in Asian economies to consider their next moves.The Fed is expected to cut rates by another 125 basis points next year, much more than Asian central banks. But with the U.S. economy showing continued resilience, the greater risk is for the Fed to move more gradually than speed up.With inflation broadly within Asian central bank targets and growth still resilient, there is no urgency for most to be slashing rates much further.”Despite easing inflation at home, weak currencies had deterred policymakers from prematurely lowering rates, to prevent further compression in rate differentials,” said Radhika Rao, senior economist at DBS in Singapore.”Each of them is really moving on their own beat and they are not going to match the Fed’s moves one-on-one.”Apart from the Indian rupee, which the Reserve Bank of India is actively managing to keep stable, as well as the Chinese yuan, most Asian currency losses this year range from 2-6% against the U.S. dollar.  Excluding the People’s Bank of China (PBOC), seven of eight important Asian central banks which hiked rates only modestly after the pandemic compared to developed economy peers, will hold rates for the rest of 2024 or cut by 25 basis points at most, according Reuters polls taken Oct. 1-29.Only Bank Indonesia was forecast to cut by another 50 basis points this year.So far only the Bank of Korea, Bank of Thailand and Bank Indonesia have cut rates by 25 basis points while the Philippine central bank reduced them by 50 basis points. The State Bank of Vietnam reduced rates in June 2023 and has been on hold since. Next year, only the Philippine central bank was forecast to cut rates by 100 basis points while the rest were expected to hold or at most cut 50 basis points in total.The PBOC is an outlier. It announced its most aggressive monetary easing measures since the pandemic in recent weeks to revive the economy, which grew 4.5% last quarter on a year earlier, lower than the 5% growth target. But it also changed its key benchmark interest rate.For the bulk of world economies where rates are falling, the risk remains they go lower than economists currently expect, the survey found, underpinning a solid global outlook.Much will depend on whether the Fed decides to move slower than currently expected.”We believe the main risk to our interest rate outlook for Asian central banks is the path of the Federal Reserve…If the Fed chooses to be cautious with rate cuts, it will mean a stronger dollar,” said Alicia Herrero Garcia, chief economist for Asia-Pacific at Natixis. (Other stories from the October Reuters global economic poll) (Polling by the Reuters Polls team in Bengaluru and bureaus in Beijing, Seoul, Bangkok, Manila, Jakarta, Taipei and Kuala Lumpur; Editing by Ross Finley, Hari Kishan and Ros Russell) More

The New York facility will be expected to drive innovation in EUV technology, a complex process necessary to make semiconductors, the U.S. Department of Commerce and Natcast, operator of the National Semiconductor Technology Center (NTSC) said.The launch of the facility “represents a key milestone in ensuring the United States remains a global leader in innovation and semiconductor research and development,” Commerce Secretary Gina Raimondo said.Last year, Raimondo had said she would make multiple funding awards, which could drastically reshape U.S. chip production.The announcement comes days after the Biden administration said it is finalizing rules that will limit U.S. investments in artificial intelligence and other technology sectors in China that could threaten U.S. national security.The new rules are due to come into effect on Jan. 2 and are part of a broader push to prevent U.S. know-how from helping the Chinese to develop sophisticated technology. More