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Eurozone inflation fell to 1.7 per cent in January, undershooting the European Central Bank’s 2 per cent target, as lower energy costs and a stronger euro kept a lid on consumer price rises.

The annual inflation estimate for December was in line with economists’ forecast in a Reuters poll and below the 2 per cent figure recorded the previous month.  

The ECB, which meets for the first time this year on Thursday, is widely expected to hold its benchmark interest rate at 2 per cent for the fifth meeting in a row. 

The central bank has predicted that inflation will average 1.9 per cent this year after hovering at 2.1 per cent in 2025.

The euro was stable against the dollar at $1.182 after the data. Traders in swaps markets continued to price a slim chance of a further ECB cut later this year, ascribing a roughly 20 per cent probability to another quarter-point reduction in the benchmark rate by September.

This is a developing story