- IHS Global Insight
Data on inflation from Eurostat added to the worries of the European Central Bank as the Euro area returned to deflationary territory. Consumer prices fell by 0.2% on an annual basis in April, showing a negative trend from March, when the gauge displayed no change. On a month-to-month basis the gauge grew 0%, down from last month's 1.2% growth and in line with estimates. The development is certainly bad news for the ECB, which has pursued strong monetary stimulus and quantitative easing measures, targeting the low inflation levels. The QE programme was expanded to 80 billion dollars per month in March, while interest rates were pushed further into the ground to -0.4%. However, regardless the present gloomy inflationary scene, ECB's struggles to curb the deflationary pressures cannot be yet discredited. Analysts believe that the central bank will stand pat for a while, but they bet that it will eventually have to do more.
The 19-country block experienced deflation for the first time in 2014, following a consistent decline in the measure. The CPI has showed levels under the targeted 2% since March 2013 already, entering the "danger zone" with numbers under 1% in November the same year.
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