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31 Jul 2014
Eurozone CPI to remain below 1% over coming quarters – BNP Paribas
FXStreet (Łódź) - Clemente de Lucia, Economist at BNP Paribas, believes that the Eurozone CPI numbers released today and showing a decline to 0.4% in July from 0.5% in June suggest that inflation will stay subdued in the coming quarters.
Key quotes
“A combination of large spare capacities and weak activity is weighing on price dynamics in both core and peripheral countries.”
“Against a backdrop of very moderate domestic price pressures, services inflation (40% of the headline index, the highest weight) should remain subdued.”
“By contrast, energy and food prices might slightly increase over the remaining quarters of the year, benefiting from positive base effects.”
“We expect inflation to average around around 0.5% and 0.6% in Q3 2014 and Q4 2014, respectively.”
“For the whole year inflation should be 0.6% and just slightly above 1% in 2015, that is well below the ECB inflation target for price stability.”
“Although price and credit dynamics are subdued (credit growth to the private sector kept on contracting at relatively high pace in June), the ECB will not embark on further actions any time soon and definitely not before having a better idea of the effects on the economy of the TLTROs (the next ECB meeting on August the 7th).”
“The first two TLTROs will be conducted in the second half of the year.”
Key quotes
“A combination of large spare capacities and weak activity is weighing on price dynamics in both core and peripheral countries.”
“Against a backdrop of very moderate domestic price pressures, services inflation (40% of the headline index, the highest weight) should remain subdued.”
“By contrast, energy and food prices might slightly increase over the remaining quarters of the year, benefiting from positive base effects.”
“We expect inflation to average around around 0.5% and 0.6% in Q3 2014 and Q4 2014, respectively.”
“For the whole year inflation should be 0.6% and just slightly above 1% in 2015, that is well below the ECB inflation target for price stability.”
“Although price and credit dynamics are subdued (credit growth to the private sector kept on contracting at relatively high pace in June), the ECB will not embark on further actions any time soon and definitely not before having a better idea of the effects on the economy of the TLTROs (the next ECB meeting on August the 7th).”
“The first two TLTROs will be conducted in the second half of the year.”