Global weekly: Eurozone yearns for ECB action

Press release -

Energy and food prices fell sharply, but core inflation rose in the eurozone. Also the euro has weakened further. Together with low eurozone growth, these circumstances will drive the ECB to finally announce large-scale asset purchases.

Energy and food prices fell sharply, but core inflation rose in the eurozone. Also the euro has weakened further. Together with low eurozone growth, these circumstances will drive the ECB to finally announce large-scale asset purchases.

Macro update
Eurozone inflation turned negative as expected last month. The decline in inflation was due to a sharp fall in energy and food prices. We expect inflation to remain negative over the next few months. The exact path depends on oil prices. However, core inflation, without food and energy, actually rose from 0.7% to 0.8% y-o-y and is likely to move sideways. We think that the risk of core inflation turning negative – and the eurozone falling into sustained bad deflation – is low.

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