Surveys Show Europe’s Inflation and Unemployment Unchanged

When the European Central Bank unleashed a stimulus barrage in June, it cautioned that the economy would take some time to respond. Data due this week may test its patience.

The inflation rate remained at 0.5 percent for a third month in July, according to the median forecast of 42 economists in a Bloomberg survey. The unemployment rate remained unchanged at 11.6 percent in June, a separate survey shows. That may fuel policy makers’ concern that annual price gains will become entrenched at a fraction of the ECB’s goal of just under 2 percent, and increase calls for further action.

The ECB unveiled a range of measures including a negative deposit rate and targeted long-term loans last month. While the package has helped push the average yield on bonds from Europe’s most-indebted nations to a record low and bolstered manufacturing and services in a vote of confidence, it has yet to show its impact on prices, growth and lending, as geopolitical tensions threaten to undermine the recovery.

“Speculation about an asset-purchase program from the ECB is likely to gain further traction,” said Benjamin Schroeder, an interest-rates strategist at Commerzbank AG in Frankfurt. “The crises in Ukraine and the Middle East should remain a driving factor” for the euro-area economy, he said.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza