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Euro Zone Inflation Fall, Record Jobless Point To Ecb Rate Cut

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Inflation in the euro zone has fallen to a three-year low and unemployment has hit a new record, cementing expectations of an interest rate cut by the European Central Bank later this week.

With the bloc's economy mired in recession, inflation tumbled to 1.2 percent in April, the lowest level since February 2010 and the biggest monthly drop in more than four years, the European Union's statistics office Eurostat said on Tuesday.

That put the annual rate of increase in the cost of living well below the ECB's target of close to, but below 2 percent, raising pressure on the central bank to act to aid growth.

Euro zone unemployment meanwhile reached a record 12.1 percent of the working population in March.

Low interest rates have been so successful at encouraging job growth it's amazing that they haven't gone to 0%.

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An ECB cut would mean nothing for PIIGS SMEs, who desperately need lower borrowing costs, only Euro banksters would benefit.

Draghi's Achilles' Heel: Small Business Credit Crunch

The European Central Bank's pledge to buy sovereign debt has slashed borrowing costs for Spain and Italy, but not for the small businesses that are key to economic revival.

Interest rates on business loans of up to $1 million surged throughout the eurozone periphery in January and are now only modestly below levels before ECB President Mario Draghi vowed to do whatever it takes to save the euro.

Loans up to five years carry an interest rate of about 6% in Spain and Italy and 7% in Greece and Portugal, compared to just 3.5% in Germany.

The spread between small-business borrowing costs in the periphery and Germany is now wider than it was before Draghi unveiled his bazooka last July.

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  • 242 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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