Euro zone inflation drop might back cautious Draghi

Euro zone inflation drop might back cautious Draghi

This month euro zone inflation dipped, probably vindicating ECB President Mario Draghi's cautious policy stance and also proving that the EU bloc might still be years away from a sustained ascend in consumer prices.

In March, inflation in the 19-member currency union sagged to 1.5% from a four-year peak of 2% in February, quite below hopes for 1.8% as energy, services and food prices grew slower than the previous month.

Underlying inflation, a measure closely monitored by the ECB, headed south to 0.7% from 0.9%, thus erasing pressure on Mario Draghi to tighten the ECB's money taps in the nearer future.

When the previous month overall inflation reached the ECB's objective, conservative countries such as Germany applied pressure on Draghi, calling for an end to the ECB’s 2.3 trillion euro asset buying scheme.

However, the ECB rejected those calls, pointing out that inflation has already peaked in 2017 and it won’t get back toward its 2% objective. 

 

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