All Reports

Oct 31 2013

Inflation Outlook Likely to Influence ECB Rate Cut Decision

ECRI has just updated its Eurozone Future Inflation Gauge (EZFIG). The value of this forward-looking gauge lies in its ability to predict cyclical turns in Eurozone inflation.

Eurozone inflation grew at just 0.7% in October, its slowest pace in nearly four years. With inflation well below the ECB’s target of 2% and the unemployment rate at a record high, expectations of an ECB benchmark rate cut are increasing – an issue that has divided the bank’s governing council for months.

The latest update to the EZFIG clarifies the future trajectory of Eurozone inflation, indicating whether inflation will continue to slow in the coming months, further compelling the ECB to cut rates.

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