Annual euro zone inflation reached 4% in October, its highest level in three years, according to a flash estimate released on Wednesday. It rose from 3.8% in September, largely because of surging energy prices, with energy inflation climbing to 20.8%. Lithuania recorded the highest inflation rate at 6.1%, while Malta had the lowest at 2.3%, and all 21 euro zone countries remained above the European Central Bank’s 2% target. After keeping its key interest rate at 2.5% last month, markets now assign more than a 72% probability to a rate increase in December. Persistent turmoil in the French bond market nevertheless constrains this policy, according to analyst Robert Mertens.
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