The European Central Bank has more room to cut interest rates toa record low early next year after reports showed the sovereigndebt crisis is damping inflation pressures.

The rate of growth in M3 money supply, which the ECB uses as agauge of future inflation, fell to 2 percent in November from 2.6percent in October, the Frankfurt-based central bank said today.Growth in loans to households and companies across the 17-nationeuro area also slowed, while inflation in Germany, the region'slargest economy, decelerated in December.

The data reinforce the view “that underlying inflationarypressures are easing and that the ECB has ample scope to cutinterest rates again in the early months of 2012,” said HowardArcher, chief European economist at IHS Global Insight in London.“Euro-zone inflation is poised to retreat markedly over the comingmonths.”