Eurozone inflation holds steady at 1.4% in October

Headline consumer prices in the eurozone rose at the same annual pace in October as in the previous month, as the 19-nation bloc's strong currency helped block inflationary pressures from abroad.

October's consumer price index (CPI) rose at an annual rate of 1.4%, the same pace as September and matching analysts' expectations.

At 1.4%, the headline rate of inflation remained well below the European Central Bank's 2% target rate for price stability.

Euro strength

Continuing strength for euro against its rivals ensured there was little effect from rising raw materials prices.

Strength in the euro has helped subdue inflationary pressures from abroad: Pixabay

The euro's gains against the dollar, the US currency in which most commodity contracts are priced, ensured inflation from imported goods remained subdued.

Market reaction

The inflation data, however, undermined the euro on foreign exchanges as any hopes for further policy tightening by the ECB were dashed.

The central bank has already set out a schedule for reducing its massive monthly bond buying programme, but has repeatedly insisted it will not move on interest rates until the quantitative easing has ended.

"Some would argue that in doing so Mr Draghi [ECB president] has given much clearer forward guidance than his British counterpart, Mark Carney," said Jacob Deppe at Infinox.

Thanks to Draghi's clear forward guidance, the euro has not been a heavy casualty from such data, and on Thursday, it was down just 0.15% against the dollar at $1.1773.