ECB Being Proven Correct on Inflation

Mario Draghi’s German difficulty may be melting away with the change of seasons.

The European Central Bank president had barely begun the New Year when a winter spike in consumer prices provoked resurgent calls in Europe’s biggest economy for a halt to his institution’s extraordinary stimulus. Now that spring is in the air, the surge has reversed with the biggest drop in Germany’s inflation rate since 2013, implying that one-off effects from energy have been masking underlying weakness — just as Draghi and his colleagues had predicted.

Spanish data on Thursday chimed with the outcome in Germany, signaling that Friday’s statistics for the euro zone as a whole may go in the same direction. Against that backdrop, policy makers from across the spectrum of opinion on the Governing Council voiced continued support to sticking to the stimulus plan they have — at least until the end of 2017.

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.