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Pressure Mounts for QE in Eurozone

Thursday, January 8, 2015

Inflation in the Eurozone has turned negative for the first time since 2009 as pressure mounts on the European Central Bank (ECB) to take action to stimulate the economy.

Prices in December were 0.2% lower than the same period last year according to official statistics. This decrease was driven by the plunging price of oil, which has seen energy prices fall 6.3% compared to December 2013.

These latest figures were significantly below the ECB’s inflation target of approximately 2%. However, there was some respite for policymakers as the prices for services are estimated to have risen by 1.2%.

The inflation data has been called "dire news for the ECB" and makes it increasingly likely that they will launch a new round of quantitative easing (QE) later this month.