Berlin  - Annual inflation in the 16-member euro currency bloc recorded another fall in January, data to be released Friday is forecast to show, giving the European Central Bank (ECB) room to press on with its rate-cutting cycle.

The predicted fall in inflation to 1.3 per cent in January from 1.6 per cent in December comes in the wake of a drop in oil prices and slowing economic growth.

The ECB has reduced borrowings costs by 225 basis points since October, cutting its benchmark refinancing rate to 2 per cent last month.

However, ECB chief Jean-Claude Trichet has indicated that the next rate cut is likely to come in March after the bank has assessed the economic impact of the reductions it has so far delivered.

Analysts believe that a steady stream of grim eurozone economic data will force the ECB to continue trimming rates in the coming months.

Brussels has already revised down its 2009 eurozone economic growth forecast to a 1.9-per-cent contraction with a closely watched European Commission economic sentiment for the currency bloc sliding to a record low on Thursday. (dpa)