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Eurozone inflation numbers support the cause for stimulus from ECB – Rabobank

FXStreet (Delhi) – Jane Foley, Research Analyst at Rabobank, suggest that today’s EZ CPI report in addition to the news of a disappointing rise in German unemployment undoubtedly has increased the case in favour of more policy action from the ECB.

Key Quotes

“The Eurozone September CPI inflation estimate at -0.1% m/m may have been weaker than the printed market consensus but soft German and Spanish price data yesterday had helped prepare investors for bad news. In the latest Bloomberg survey, two thirds of economists indicated that they expected the ECB to add to its EUR1.1 trn asset purchase plan, with a many predicting that the move could come before the end of the year (in line with our view).”

“Grexit fears impacted risk appetite at the start of the summer. This was followed by the bursting of the Chinese stock market bubble and the devaluation of the CNY which focussed the market on the impact of slowing growth in China and emerging markets. It is very unlikely that these concerns will have dissipated by year-end meaning that the ECB will have a hard task in stirring up enthusiasm for the carry trade.”

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