Inflation in France and Spain plunged below 2% — fueling predictions by investors and economists that the European Central Bank will speed up the pace of interest-rate cuts.

Inflation fell more than expected in both countries, likely giving the European Central Bank more confidence that it can cut its key interest rate without risking a revival of price pressures.

Annual inflation slowed sharply in France and Spain in September, official data showed today, fuelling speculation over whether the European Central Bank will cut rates again next month.