Eurozone inflation dips back down to give European Central Bank further cause to pause

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A sanguine Mario Draghi isn’t surprising in the current environment regardless of the irritatingly high single currency, the main reason being stable Inflation figures. For months, arguably years, Inflation has been a thorn in the side of all Monetary Policy decisions for the ECB President.However, given current levels hovering around the 1.2% mark, despite Germany and Italy showing recent lapses, ECB officials will be happy with consistent levels above 1.0%. Small steps higher for Inflation will allow Draghi to consolidate his plan to curtail Quantitative Easing effectively and push the bloc state out of the red and into recovery mode. Recent pushes to 3-year peaks around 1.2500 for EURUSD will be frustrating, but a US rate hike next month could soon restrain the euro rally. All is not bleak for our friends across the channel.

Alex Lydall quoted in City AM

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