MercoPress. South Atlantic News Agency

Euro-zone: record high jobless: record low inflation

Euro-zone unemployment rose more than economists expected in January and inflation slowed. The jobless rate in the Euro zone increased to 8.2%, the highest in more than two years, from 8.1% in December, the European Union statistics office in Luxembourg said Friday.

Unemployment among Euro-zone nations is highest in Spain, at 14.8%, and lowest in the Netherlands, at 2.8%. The jobless rate in the Euro zone in January 2008 was 7.3%. "Unemployment is a clear concern right now in many parts of the Euro zone" European Central Bank President Jean-Claude Trichet said in Dublin. Labour-market "reforms are very important to counteract the economic downturn and limit its negative impact on employment." The Frankfurt-based European central bank is under pressure to follow the Bank of England and the US Federal Reserve in outlining additional measures to combat the deepening slump. The ECB, which has lowered its benchmark rate by more than half since early October to 2%, matching a record low, is expected to cut another 50 basis points off on March 5. ECB Governing Council member Miguel Angel Fernandez Ordo?ez earlier in the week said policy makers were "obliged" to study the potential use of unconventional tools and a review of possible steps was "progressing". ECB colleague Ewald Nowotny said on February 17 that a discussion on unconventional measures was "going on in the ECB and we have to see how things develop." ECB Governing Council member Axel Weber said in a newspaper interview this week that while the ECB probably will cut borrowing costs again, 1 percent is probably the "lowest limit" for the benchmark rate. The Euro zone economy shrank the most in 13 years in the fourth quarter as companies scaled back output and shed jobs. The International Monetary Fund predicts a 2% contraction this year and IMF Managing Director Dominique Strauss-Kahn on February 19 said that forecast may need to be lowered as the global slump worsens. With the recession deepening and oil prices down more than 70% from their all-time high in July, Euro-zone inflation held below the ECB 2% ceiling for a second month in January. Energy prices declined 5.3% from a year earlier. Annualized inflation in the 16-nation area fell to its lowest in nearly a decade in January, to 1.1%. It is down from 1.6% in the year to December. According to official figures, the Euro zone has been in recession since September of last year.