- Luc Coene, ECB governing council member
According to the ECB governing council member Luc Coene, the central bank will not act soon, as policymakers are waiting for more information on the inflation outlook before making any assessments of the 18-nation economy. Simultaneously, executive board member Benoit Coeure pointed out there is a possibility the ECB will introduce negative deposit rates. Chances the benchmark interest rate will be adjusted once again are low, taking into account the key rate is already close to zero; however, the possibility deposit rates will be revised sound more realistic. The deposit facility interest rate was lowered to zero in July 2012.
This week's inflation report adds more pressure on the ECB, as Destatis confirmed German inflation eased in January, moving further away from the official target of 2%. Last month, the CPI advanced 1.3% year-on-year, while on a monthly basis prices fell 0.6%. The so-called harmonized CPI showed inflation accelerating 1.2% from a year ago and falling 0.7% month-on-month. All figures came in line with analysts' forecasts. The moderate inflationary pressure in the first month of 2014 was mainly due to the downward price trend for mineral oil products that posted a 5.2% decline in January. The final CPI readings usually have a modest impact on markets, as two versions have already been released 15 days apart. Nevertheless, they diminish any chances the data could surprise markets to the upside.
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