Eurogroup President Says Disinflation Is Not a Worry

Worryingly low inflation in the euro zone may have spurred deflation fears, but it’s actually a sign that the region’s economy is recovering from its crisis, Eurogroup President Jeroen Dijsselbloem told CNBC.

“The relatively low inflation at the moment is part of the phase which we are in, which is dealing with some of the macroeconomic problems,” said the leader of the forum of the EU’s finance ministers.

“If you strengthen your competitiveness, if you manage to bring back the cost of labor – and a number of Eurozone countries are doing exactly that at the moment – it inevitably leads to a lower inflation,” Dijsselbloem said.

“The lower inflation is part of the economic recovery and the restructuring and it’s inevitable. I’m not particularly worried that it’ll go further,” he said.

In December, consumer price inflation in the region was only 0.8 percent year-on-year, below expectations, after rising only 0.9 percent in November and still only slightly above October’s 47-month low of 0.7 percent, adding to concerns deflation might emerge.

via CNBC

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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