European inflation slowed in May, giving the European Central Bank room to keep borrowing costs on hold next month. Inflation in the 17-nation euro region slowed to 2.7 percent from 2.8 percent in April, the European Union's statistics office in Luxembourg said today in an initial estimate. April's reading was the fastest since October 2008. Unemployment held at 9.9 percent in April from the previous month, a separate report showed.
ECB President Jean-Claude Trichet has signaled that the central bank may keep interest rates on hold in June after last month increasing the benchmark rate 25 basis points to 1.25 percent to fight price pressures. With the recovery losing momentum and governments cutting spending to plug budget gaps, the Organization for Economic Cooperation and Development said on May 25 that further rate increases "are not required immediately."
