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You are here: Home / British Sterling / Eurozone Inflation Remains Static

Eurozone Inflation Remains Static

August 17, 2017 by Ben Fletcher

Eurozone Inflation Remains Static

This morning the latest Eurozone inflation data was released at 1.3%, which was as expected, however, it shows the same growth as last year.

Despite a multitude of positive data releases for the Eurozone over the last six months, inflation is doing little to grow. In turn this is going to leave the European Central Bank (ECB) with a headache as to what they can do with their current stimulus measures. Many analysts have predicted that they will start to taper stimulus in the near future. Although this could now be in question.

Germany and France want the European Central Bank to raise interest rates. Whilst their economies are booming there is little appetite across the rest of the Eurozone due to slow growth and high debt levels. This will lead to Germany especially becoming very frustrated as savers there are getting very little in interest despite some of the best business levels in decades.

The meeting minutes for the latest ECB meeting will be released today also providing some insight into the latest decision. This can be a volatile time as anything that could provide clarity to a future decision will cause the markets to move.

Anybody now waiting for a major change in direction will be left wanting as after a meticulous year of control, Mario Draghi is unlikely to change his route.

There is reports that some of the smaller economies in the Eurozone are starting to see growth but there could be a pinch on these tourist economies. Next year there could be considerably less British tourists going abroad if the exchange rate doesn’t change. This could have quite an disruptive effect on some of these economies who rely so much on tourism for their income, such as Greece and Spain.

Whilst there continues to be so much Brexit uncertainty the more information released by the UK Government the more positive things might become. The series of “position papers” hat are being released could cause some positive movement if they are well received. Therefore I think the GBP/EUR exchange rate could start to move off these 1.10 levels.

Filed Under: British Sterling Tagged With: ECB, GBPEUR, Inflation, interest rates, Mario Draghi

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