Eurozone inflation may
signal ECB's future moves better than its President Mario Draghi could:
Last week, the ECB reiterated its commitment to backing out of its
extremely accommodative monetary policy stance gradually, while further
delaying an announcement on timing of any rate moves that traders had
eagerly anticipated.
From the central bank's perspective, that was the most significant move it could make without stoking fear that its confidence in the economy and/or financial system was flagging. Yet, this group finds itself in a difficult situation where it's falling behind the curve as the Fed continues to tighten and its own easing is yielding smaller and smaller results.
Where Draghi and his colleagues have to walk a fine line, data can be more blunt. This past session, the Eurozone first-quarter GDP growth slowed in-line with expectations. More important will be the region's inflation pace.
Earlier this week, German, Italian and Portuguese consumer price indices all weakened. Between the Eurozone's inflation and the European Commission's updated growth forecasts, we will have the full picture for ECB decision making.
From the central bank's perspective, that was the most significant move it could make without stoking fear that its confidence in the economy and/or financial system was flagging. Yet, this group finds itself in a difficult situation where it's falling behind the curve as the Fed continues to tighten and its own easing is yielding smaller and smaller results.
Where Draghi and his colleagues have to walk a fine line, data can be more blunt. This past session, the Eurozone first-quarter GDP growth slowed in-line with expectations. More important will be the region's inflation pace.
Earlier this week, German, Italian and Portuguese consumer price indices all weakened. Between the Eurozone's inflation and the European Commission's updated growth forecasts, we will have the full picture for ECB decision making.
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