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EZ deflationary climate for 2016 - TDS

FXStreet (Guatemala) - Analysts at TD Securities explained the EZ's deflation, oil and downside risks.

Key Quotes:

"Oil prices have fallen since the ECB’s September macroeconomic projections. This will result in a weaker ECB inflation forecast for 2016 in their December update, making room for further ECB easing at that meeting.


Sustained deflation is unlikely, however: even in an extreme case of $25/bbl oil, euro area inflation would average 0.2% in 2016.

As a rough rule of thumb, for each $10/bbl fall in Brent prices, euro area inflation would be roughly 0.25p.p. weaker in 2016."

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