The inflation rate in Germany, Europe’s biggest economy, fell to 2% in August, below the expectation of economists and paving the way for further interest rate cuts on the continent.
The consensus view of economists surveyed by the Reuters news agency was for Germany’s annualized inflation rate to come in at 2.3% in August.
In July, German inflation stood at an annualized rate of 2.6%. Like most central banks, Germany’s Deutsche Bundesbank targets inflation at 2%.
The lower-than-expected inflation rate for August comes amid an economic slowdown in the largest and most influential European economy.
The German economy has been in a recession over the past year, defined as two consecutive quarters of economic contraction.
Most recently, Germany reported a 0.1% economic contraction for this year’s second quarter.
The inflation rate in Germany is now lower than for the European Union (EU), where it currently stands at an annualized rate of 2.6%.
The European Central Bank (ECB) most recently held interest rates steady at its July policy meeting after reducing them by 25-basis points in June of this year.
Futures traders are betting on another rate cut in September when the European Central Bank next meets.
Central bankers in Europe have said that any further interest rate reductions will depend on economic data across its member nations and be decided on a meeting-by-meeting basis.