- Jens Weidmann, Bundesbank President
German inflation fell to a dangerously low level in December, providing the ECB Governor Mario Draghi with more prerequisite to launch a full-blown bond-purchasing programme during the board meeting on January 22. Consumer prices in Germany, the heartland of QE-opposition, slowed to just 0.2% in December, the lowest level in more than five years, and averaged 0.9% for the whole 2014. The annual rate of inflation, measured according to common European Union standards, came in at 0.1% in December, while prices also climbed 0.1% on the month, the Federal Statistics Office. Earlier in the week, Jens Weidmann, the Bundesbank President and a member of the ECB Governing Council, reiterated his opposition to QE programme, despite the opinion of the European Court of Justice that the OMT programme is legitimate, which in fact gives a green light to Draghi's QE. Weidmann underscored that the ECJ's view also showed that the ECB has to act with its legal boundaries in its decisions and measures.
Meanwhile, a separate report from Eurostat confirmed that the Euro zone's inflation turned negative for the first time in more than five years in December. The Harmonized Index of Consumer Prices fell 0.2% on an annual basis in December, reversing the 0.3% gain in November. This was the biggest decline seen since September 2009, when prices decreased 0.3%.
© Dukascopy Bank SA