-Jasper Lawler from CMC Markets UK
With one day left before the ECB meeting, 18-nation's bloc continues to disappoint. Inflation is not the only concern for the central bank, as official reports suggested the problem is much deeper and the economy is not healing yet. A slowdown in economic growth in the first quarter was confirmed on Wednesday, reinforcing calls for bold action by European policymakers to fight persistently low inflation and record-high unemployment.
The Eurozone economy expanded by only 0.2% in the three months to March, region's statistics office Eurostat said. Analysts expected the 9.5 trillion economy to grow by 0.4% on the quarter in the January to March period. On an annual basis the economy expanded 0.9% from 0.5% a quarter earlier. Growth could be even worse if not Germany, as Europe's powerhouse compensated the stagnation in Europe's second largest economy and the falling output in countries like Italy, the Netherlands, Portugal or Finland. Despite worrying signs during the last several months, Germany still managed to post a solid 0.8% growth, while economists were betting on a slowdown. Separately, Eurostat unveiled industrial producer prices, which are considered to be a proxy for consumer price inflation, which already stands at 0.5%. The PPI indicator showed its fourth straight monthly drop. Practically all economic indicators are pointing towards ECB action on Thursday, and in case Draghi decides to postpone the decision, he will miss the last chance to boost the economy.
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