Eurozone inflation edges up to 0.1 per cent in October as European Central Bank vice president Vitor Constancio hints at more stimulus measures
Eurozone inflation ticked up in October, but remains far too weak to deter analysts from betting that stimulus measures will be ramped up – while yet another European Central Bank (ECB) official has strongly hinted the central bank will take further action to boost growth and inflation in the currency-bloc.
October’s annual inflation rate was 0.1 per cent, according to figures released this morning by European statistical office Eurostat, up from minus 0.1 per cent in September.
With the Eurozone’s inflation now coming in below its two per cent target for the last three years, the ECB is now widely expected to boost its €1.1 trillion (£780bn) asset purchase programme.
ECB vice president Vitor Constancio said this morning at a speech in Frankfurt that there was “downside risk to [the ECB’s] economic projections”.
He also said the “Eurozone’s challenges are more acute than elsewhere”.
ECB officials have said the asset purchase programme can be expanded by increasing the rate of purchases from €60bn a month, extending the planned end date past September 2016, or buying bonds with longer maturities.
“Our baseline remains that QE will be the piece of resistance of the package we are likely to get on 3 December, in spite of the press reports and market chatter focusing on a big cut in the deposit rate (i.e. significantly exceeding current market pricing),” said economists at Bank of America Merril Lynch this morning.
“We expect an extension in the purchases until September 2017 at least, with a re-affirmation of the open-ended of the programme after that, together with an expansion in the pace of purchases which would not exceed €70bn.”