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May 01 2014

As Eurozone Inflation Disappoints, Pressure on ECB Grows

Consensus hopes for a strong rebound in Eurozone inflation were dashed this week with inflation growing less than expected, despite a boost from the Easter holiday. On the heels of the disappointing data, the European Central Bank (ECB) faces increased pressure to cut rates, and even enact quantitative easing, in an effort to stave off deflation. With the ECB expected to delay a rate cut decision until June, will disinflation continue or will meager inflation be enough to indefinitely delay further accommodation?

ECRI’s Eurozone Future Inflation Gauge (EZFIG) predicts cyclical turns in Eurozone inflation and its latest update answers this question, providing insight into how it may influence ECB decision-making.

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