German inflation speeds down steeply as ECB dials back stimulus

German inflation speeds down steeply as ECB dials back stimulus

In December, German annual inflation speeded down steeply, decreasing below the European Central Bank's objective just as it concluded a crisis-fighting bond buying program after four years and as markets dived worldwide.

Germany’s consumer prices, harmonized just to make them comparable with inflation data from other EU countries, managed to head north by up to 1.7% year-on-year following a 2.2% leap in the previous month. That’s what the Federal Statistics Office uncovered on Friday.

The annual harmonized consumer price inflation rate or HICP for short would speed down to 1.9%. That’s what a Reuters survey had suggested.

As a matter of fact, the EU’s key financial institution targets inflation of close to although below 2% for the euro zone in general. Eventually, December's dismal German annual inflation rate was marked by a deceleration in energy price leaps.

Besides this, according to the preliminary numbers, EU-harmonized prices headed north by up to 0.3% on the month, in contrast with the estimate for a 0.4% jump.

As follows from a precarious balancing act, earlier this month the EU’s major bank formally concluded its 2.6 trillion euro bond-purchasing program, although pledged to keep feeding stimulus for years into the EU economy struggling with a sudden deceleration as well as political turmoil.

On Thursday, the ECB told that the global economy is braced for decelerate next year and stabilize thereafter. Nevertheless, prices are anticipated to go up.

Meanwhile, the evergreen buck has been affected for recent weeks by strengthening hopes that the key US bank will stop its tightening cycle sooner than anticipated, or risk impacting the American economy with further interest rate lifts.

Additionally, a partial shutdown of the American cabinet, trade tensions between China and America, not to mention complications closely connected with the UK’s departure from the European bloc are also keeping traders cautious.

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FED and BOE Make Another Attempt to Beat Inflation
FED and BOE Make Another Attempt to Beat Inflation

The Federal Reserve (Fed) will announce its Interest Rate Decision and make a statement about the future monetary policy on Wednesday, September 21, GMT+3. After the higher-than-expected inflation numbers published on September 13, there’s almost no doubt the Federal Reserve will come up with another 75-basis-point rate hike. However, surprised by the CPI numbers, several Fed members announced the possibility of a 100-basis-point rate hike on Wednesday.

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