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Euro zone slides into deflation

The euro zone’s inflation rate fell into negative territory in December for the first time since 2009, adding more pressure on the European Central Bank (ECB) to launch a U.S. Federal-Reserve-style bond-buying program.

Annual consumer prices for the region fell 0.2 percent year-on-year in December, according to a flash estimate on Wednesday morning. This was below market expectations of a 0.1 percent fall and was lower than November’s figure of a 0.3 percent rise.

It comes after disappointing data from Germany on Monday, which is traditionally known as the economic powerhouse of the euro zone.

Annual flash inflation figures for the country slowed to its lowest level in over five years last month, falling to just 0.1 percent from 0.5 percent last month. The flash figure for the whole euro zone is due out at 10:00 a.m. GMT.

Europe’s single currency held steady after the release, after creeping lower this week. The euro was trading at 1.1866 after closing Tuesday’s session at 1.8888.

The currency has slipped by 1.87 percent against the U.S. dollar so far this year after depreciating 12 percent in the whole of 2014. Market-watchers are keenly anticipating the announcement of a full-scale quantitative easing (QE) program by Mario Draghi, ECB president.

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