FRANKFURT, Nov 30 Reuters Euro zone inflation tumbled far more than expected this month, a challenge to the European Central Bank39;s narrative that price growth remains stubborn and likely fuelling bets on early spring rate cuts in defiance of the bank39;s explicit guidance.

Consumer price growth in the 20 nations sharing the euro currency dropped to 2.4 in November from 2.9 in October, well below expectations for 2.7, as nearly all items with the notable exception of unprocessed food prices were a drag.

Even underlying price pressures eased more quickly than forecast, with inflation excluding food and energy, closely scrutinized by the ECB, dipping to 3.6 from 4.2 on a big drop in services prices.

The rapid inflation slowdown puts the ECB and investors on a collision course as the two appear to see greatly different paths ahead, both for consumer prices and ECB interest rates.

The ECB argues that underlying dynamics are more stubborn than they appear and inflation will actually come back above 3next year, only hitting the central bank39;s 2 target in late 2025, partly due to rapid nominal wage growth.

This will require the bank to hold its deposit rate at a recordhigh 4 for an extended period, and even Yannis Stournaras, the dovish chief of the Greek central bank, sees no cut before mid2024.

Fresh data out on Thursday showing unemployment holding at a recordlow 6.5, despite an economic contraction, would appear to support this argument as it underlines just how…