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During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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EZ FIG hits 33-month low


Euro zone inflationary pressures fell to a near three-year low in October, a forward-looking indicator showed on Friday, suggesting inflation would fall sharply in coming months.

The New York-based Economic Cycle Research Institute said its Eurozone Future Inflation Gauge, which aims to predict cyclical turns in inflation in the next six to nine months, fell to a 33-month low in October to 101.9 from 105.3 in September.

Inflationary pressures fell across all four major euro zone economies in October, to a five-year low in France and 12-year low in Spain.

"With the EZFIG plunging to a 33-month low, having experienced its biggest two-month decline in nearly eight years, euro zone inflation is set to fall further," ECRI said in a release.

Official inflation in the euro zone tumbled to 2.1 percent in November from 3.2 percent the previous month, coming closer to the European Central Bank's ceiling of close but below 2.0 percent.

The ECB cut rates by 75 basis points on Thursday to 2.5 percent, its biggest cut ever, highlighting downside risks to inflation. Its staff projections for inflation were also revised down to a mid-point of 1.4 percent in 2009, making it easier for it to cut rates further as expected by economists.