Euro-area inflation slowed below the European Central Bank’s 2% target for the first time since 2021 — backing investor bets that interest rates may be lowered more quickly than previously anticipated.

German inflation declined further below the European Central Bank’s 2% target in September, further raising the chance of a consecutive interest-rate cut at the bank’s next meeting in October.Consumer prices were 1.

Inflation in the 20 countries that use the euro fell to 1.8% in September, below the European Central Bank’s target of 2% for the first time in more than three years.

By Maria Martinez and Rachel More BERLIN (Reuters) -German inflation fell to its lowest level since February 2021 this month, preliminary data showed on Monday, helping European Central Bank doves build their case for another interest rate cut next month.

Inflation across the 20 euro-member countries fell to 1.8pc in September, below the European Central Bank’s (ECB) 2pc target for the first time in more than three years.

Christine Lagarde said the European Central Bank is becoming more optimistic that inflation will return to target in a "timely manner." Speaking to lawmakers at the European Parliament in Brussels, the ECB president added that the central bank will take this into account at the October policy meeting but is not "pre-committing to a particular rate path.

Deutsche Bank on Tuesday said it now expects the European Central Bank to cut interest rates again in October, after steeper-than-expected falls in inflation across the euro zone in September.

The European Central Bank is more confident that inflation is going to settle at its target after a series of recent data releases, and will take that into account when it next sets policy, President Christine Lagarde said Monday.

The European Central Bank is increasingly confident that inflation will fall to its 2% target and this will be reflected in its next policy move, the bank's president said on Monday, dropping the clearest hint yet about a coming interest rate cut.