G ermany's annual inflation rate unexpectedly eased to 2% in June, bringing Europe's largest economy to the European Central Bank's target, preliminary data from statistics office Destatis showed Monday. Analysts polled by Reuters had expected a reading of 2.2% in the twelve months to June.

Having cut rates at its June meeting to 2 per cent we think the European Central Bank is now likely to pause in July. With inflation on target in June the latest data offers little reason to think that trajectory has changed.

Euro-area inflation settled at the European Central Bank’s target in June, strengthening arguments to press pause on a year-long campaign of interest-rate cuts.