Euro rate rise less likely after inflation and job data

Image caption Euro interest rates were raised from 1.25% to 1.5% in July

Eurozone interest rates are likely to stay on hold following the release of official inflation data from Eurostat.

Inflation in the 17 countries that use the euro was 2.5% year on year in August, unchanged from July's figure.

While it is still above the European Central Bank's target of just under 2%, it means that prices are rising more slowly than earlier in the year.

Also, the eurozone's unemployment rate was 10% in July, unchanged from June's upwardly revised rate.

June's unemployment rate had previously been reported as 9.9%.

The number of people out of work rose by 61,000 to 15,757,000.

ECB President Jean-Claude Trichet said on Monday that the central bank was reassessing inflation risks, having referred to strong upward pressure on prices in previous months.

"These data should help to convince the ECB that its earlier fears of a sharp rise in inflation were unwarranted, perhaps opening the door to interest rate cuts in the not too distant future," said Jennifer McKeown, senior European economist at Capital Economics.

Rates were raised from 1.25% to 1.5% in July.

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