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Euro zone confidence at multi-year high, but inflation expectations fall

Reuters  |  BRUSSELS 

(Reuters) - Economic in the zone rose more than expected in December and the business climate indicator hit new highs, data showed on Monday, underlining robust economic growth in the single area.

The Commission's economic indicator rose to 116.0 points in December from 114.6 in November and well above the 114.8 point expectation in a poll.

It was the highest value of the indicator since October 2000. The record was the 119.0 set in May 2000.

Separately, the Commission's business climate indicator, which points to the phase of the business cycle, reached the highest value since measurements began in 1985, hitting 1.66, up from 1.49 in November.

in the 19 countries sharing the was buoyed by a rise in optimism across all sectors -- in industry, services, retail trade, construction as well as services.

But the upbeat mood, while pushing up price expectations among manufacturers, has failed to increase consumer expectations which are key to boost to the target of below, but close to 2 percent. eased to 1.4 percent last month from 1.5 percent in November.

The monthly Commission survey showed that consumers' expectation for the next 12 months fell to a four-month low o f13.6 points in December from 16.0 in November.

The slow price growth, which comes despite the zone's strongest economic growth in a decade, may vindicate the ECB's decision to keep its monetary policy easy despite growing pressure from and other richer zone countries.

The ECB has said it would continue buying bonds at least until September and keep low interest rates "well past" then to raise to its two percent target even though policymakers from the Netherlands, and other northern countries have voiced their worries about an overly easy policy while economic growth is strong.

said in a note that, while there might be upside risks to its already above-consensus forecast of 2.3 percent economic growth this year in the zone, this would probably not prompt the ECB to adopt its dovish stance.

(Reporting By Jan Strupczewski; editing by Philip Blenkinsop)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, January 08 2018. 18:05 IST