All Eyes On ECB For Next Week
With the European Central Bank’s December policy meeting coming up next week, the euro was steady above $1.24. The common currency traded at $1.2433 at 9:00 GMT on Friday morning as investors speculated that the bank would likely consider further easing at Thursday’s meeting.
Data out on Thursday suggested that the eurozone was still struggling to get back on track and raised worries that the region could slip into a period of deflation if the bank doesn’t intervene. The Wall Street Journal reported that consumer prices in Spain fell 0.5 percent annually in November, a worrying sign that the nation still hasn’t recovered from its bailout.
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Perhaps even more concerning was data from Germany, the bloc’s largest economy, which showed that the nation’s consumer prices increased by just 0.5 percent in November. The figure marks Germany’s slowest increased in nearly five years.
The poor inflation figures will likely strike a chord with the region’s central bank at next week’s meeting as ECB President Mario Draghi has said that the bank will act if inflation looks to be a problem. Over the past few months, Draghi has reiterated the bank’s willingness to roll out a large-scale quantitative easing program. However, other members of the bank’s governing council have been opposed to the idea, saying that structural reforms are necessary before the bank can inject more cash into the financial system.
In any case, most are expecting that the ECB will act eventually, but timing remains a question as the bank has already rolled out some stimulus packages that have yet to be evaluated for their impact on the economy.
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