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| Euro Zone Inflation Stays Low; Joblessness Remains High | Euro Zone Inflation Stays Low; Joblessness Remains High |
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| PARIS — Inflation in the euro zone remained stuck at a very low level in February, while the jobless rate was unchanged in January, official reports showed Friday, providing the European Central Bank with crucial data before its monetary policy meeting next week. | PARIS — Inflation in the euro zone remained stuck at a very low level in February, while the jobless rate was unchanged in January, official reports showed Friday, providing the European Central Bank with crucial data before its monetary policy meeting next week. |
| The central bank is concerned that, with unemployment depressing demand, extremely low inflation could ultimately bring on a debt spiral that hurts borrowers and already-weak banks. Whether the latest data will prompt any action by the central bank is hard to predict. | The central bank is concerned that, with unemployment depressing demand, extremely low inflation could ultimately bring on a debt spiral that hurts borrowers and already-weak banks. Whether the latest data will prompt any action by the central bank is hard to predict. |
| On Thursday, at an international meeting of central bankers in Frankfurt, the E.C.B. president, Mario Draghi, was sticking to his script of recent weeks, which so far has resulted in the bank’s taking no new action to stimulate the euro zone economy. “Overall, we see the euro area’s economic recovery gradually taking hold, albeit at a slow and uneven pace,” Mr. Draghi said in a speech. | On Thursday, at an international meeting of central bankers in Frankfurt, the E.C.B. president, Mario Draghi, was sticking to his script of recent weeks, which so far has resulted in the bank’s taking no new action to stimulate the euro zone economy. “Overall, we see the euro area’s economic recovery gradually taking hold, albeit at a slow and uneven pace,” Mr. Draghi said in a speech. |
| Mr. Draghi expressed concern about the low level of prices, but added, “we are clearly not in deflation,” a condition he defined as “a self-reinforcing fall in prices that is broad-based across items and across countries.” | Mr. Draghi expressed concern about the low level of prices, but added, “we are clearly not in deflation,” a condition he defined as “a self-reinforcing fall in prices that is broad-based across items and across countries.” |
| According to the data Friday, consumer prices in the 18-nation euro zone rose at an annualized rate of 0.8 percent in February, unchanged from the revised figure for January. The “core” inflation rate, which excludes energy and food prices, ticked up to 1.0 percent from 0.8 percent in January, Eurostat, the statistical agency of the European Union, reported from Luxembourg. | |
| The jobless rate in January for the euro zone remained at 12 percent, Eurostat reported. For the full European Union, made up of 28 nations, unemployment stood at 10.8 percent, also unchanged. | The jobless rate in January for the euro zone remained at 12 percent, Eurostat reported. For the full European Union, made up of 28 nations, unemployment stood at 10.8 percent, also unchanged. |
| The numbers contrast with the United States’ jobless rate of 6.6 percent in January. But questions remain about the strength of the American recovery. | The numbers contrast with the United States’ jobless rate of 6.6 percent in January. But questions remain about the strength of the American recovery. |
| Revised data released Friday in Washington indicated that the economy in the United States grew at a slower pace in the fourth quarter of 2013 than first thought, weighed down by disappointing retail sales, inventory adjustments and a less robust trade balance. | Revised data released Friday in Washington indicated that the economy in the United States grew at a slower pace in the fourth quarter of 2013 than first thought, weighed down by disappointing retail sales, inventory adjustments and a less robust trade balance. |
| The Commerce Department now estimates that the American economy grew by 2.4 percent in October, November and December, down from an initial estimate of 3.2 percent released in late January. At 2.4 percent, the revised figure represents a substantial slowing from the pace of growth in the third quarter, which was 4.1 percent. | The Commerce Department now estimates that the American economy grew by 2.4 percent in October, November and December, down from an initial estimate of 3.2 percent released in late January. At 2.4 percent, the revised figure represents a substantial slowing from the pace of growth in the third quarter, which was 4.1 percent. |
| Most experts predict that the American economy will continue to expand at a lackluster pace in the first several months of 2014, with growth picking up over the remainder of the year. Economists are looking for growth of about 2 percent in the first quarter. | Most experts predict that the American economy will continue to expand at a lackluster pace in the first several months of 2014, with growth picking up over the remainder of the year. Economists are looking for growth of about 2 percent in the first quarter. |
| While the European headline numbers were largely in line with market expectations, investors read the small increase in the core inflation rate as making it less likely that the European Central Bank would take policy action when it meets next week, and the euro jumped 0.6 percent to its highest levels of the year, at $1.3802. The Euro Stoxx 50 index, a gauge of euro zone blue-chip stocks, fell 0.5 percent in early afternoon trading. | While the European headline numbers were largely in line with market expectations, investors read the small increase in the core inflation rate as making it less likely that the European Central Bank would take policy action when it meets next week, and the euro jumped 0.6 percent to its highest levels of the year, at $1.3802. The Euro Stoxx 50 index, a gauge of euro zone blue-chip stocks, fell 0.5 percent in early afternoon trading. |
| The euro rose against the dollar amid diminishing expectations of a rate cut by the E.C.B. next week. The Federal Reserve is currently holding its own benchmark, the federal funds rate, at a record low near zero. With the E.C.B.'s key rate at 0.25 percent, money managers have an incentive to park funds in short-term euro securities to eke out a small premium over what they would get in dollar investments. | The euro rose against the dollar amid diminishing expectations of a rate cut by the E.C.B. next week. The Federal Reserve is currently holding its own benchmark, the federal funds rate, at a record low near zero. With the E.C.B.'s key rate at 0.25 percent, money managers have an incentive to park funds in short-term euro securities to eke out a small premium over what they would get in dollar investments. |
| Officially, the euro zone has been gradually recovering since early 2013, its economy growing at a 1.1 percent annualized rate in the fourth quarter. Olli Rehn, the European commissioner for economic and monetary affairs, estimated on Tuesday that the currency bloc would grow by 1.2 percent in 2014. | Officially, the euro zone has been gradually recovering since early 2013, its economy growing at a 1.1 percent annualized rate in the fourth quarter. Olli Rehn, the European commissioner for economic and monetary affairs, estimated on Tuesday that the currency bloc would grow by 1.2 percent in 2014. |
| That growth is too weak to make much of a dent in the region’s record joblessness, however, and Mr. Rehn said that he expected the euro zone jobless rate to tick down only to 11.7 percent by next year. Eurostat said Friday that 26.2 million people across Europe are currently classified as unemployed, including more than 5.5 million young people. | That growth is too weak to make much of a dent in the region’s record joblessness, however, and Mr. Rehn said that he expected the euro zone jobless rate to tick down only to 11.7 percent by next year. Eurostat said Friday that 26.2 million people across Europe are currently classified as unemployed, including more than 5.5 million young people. |
| The jobless rate varies widely between countries. Austria, at 4.9 percent, and Germany, at 5.0 percent, are the lowest in the European Union. But Spain, at 25.8 percent, and Greece, at 28 percent in December (the latest data available), are both experiencing depression level unemployment. | The jobless rate varies widely between countries. Austria, at 4.9 percent, and Germany, at 5.0 percent, are the lowest in the European Union. But Spain, at 25.8 percent, and Greece, at 28 percent in December (the latest data available), are both experiencing depression level unemployment. |
| In Italy, where the new government of Prime Minister Matteo Renzi is grappling with political turmoil and a stagnant economy, the jobless rate rose to 12.9 percent, the highest in decades, from 12.7 percent in December. | In Italy, where the new government of Prime Minister Matteo Renzi is grappling with political turmoil and a stagnant economy, the jobless rate rose to 12.9 percent, the highest in decades, from 12.7 percent in December. |
| Rolf Campos, an assistant professor of economics at the University of Navarra, Spain, said that the rebound in core prices might reassure the central bank, making it feel “less pressed to do something to prevent undershooting” its target of keeping prices rising at a level of just under 2 percent. | Rolf Campos, an assistant professor of economics at the University of Navarra, Spain, said that the rebound in core prices might reassure the central bank, making it feel “less pressed to do something to prevent undershooting” its target of keeping prices rising at a level of just under 2 percent. |
| The concerns over deflation may be overstated, he added, as “low inflation rates are actually showing that the healing process has begun in the European periphery.” | The concerns over deflation may be overstated, he added, as “low inflation rates are actually showing that the healing process has begun in the European periphery.” |
| Jörg Krämer, chief economist at Commerzbank in Frankfurt, had predicted before the data was released that the European Central Bank would cut its main interest rate target, currently at a record low of 0.25 percent, when it meets next week. | Jörg Krämer, chief economist at Commerzbank in Frankfurt, had predicted before the data was released that the European Central Bank would cut its main interest rate target, currently at a record low of 0.25 percent, when it meets next week. |
| But the inflation report “weakens the position of the doves in the E.C.B. governing council,” he said after the Eurostat report. “The decision on interest rates on Thursday is therefore quite open.” | But the inflation report “weakens the position of the doves in the E.C.B. governing council,” he said after the Eurostat report. “The decision on interest rates on Thursday is therefore quite open.” |
| Central bank officials may decide to find another way of providing monetary stimulus, he said, perhaps by using technical measures to increase money supply, while allowing the central bank to hold the interest rate weapon in reserve. | Central bank officials may decide to find another way of providing monetary stimulus, he said, perhaps by using technical measures to increase money supply, while allowing the central bank to hold the interest rate weapon in reserve. |