The effects of the coronavirus are buffeting Europe.
- Headline, core CPI match estimates of 1.2pct
- Pressure grows for fiscal, monetary stimulus
Frankfurt, 3 March 2020 (LS NEWS) – Eurozone headline inflation fell last month and the core rate rose, leaving both well below the European Central Bank target of near but less than 2pct as policymakers mull new stimulus measures to counteract the economic effects of the Covid-19 virus.
February’s headline consumer price growth in the euro area matched fell to 1.2pct—the market estimate—from 1.4pct in January. The core inflation rate rose to 1.2pct from 1.1pct, as expected.
Capital Economics said the rapid spread of Covid-19 hit consumer price growth. “February’s fall in inflation reflected the decline in energy prices as a result of the coronavirus outbreak. But if the virus starts to sap domestic demand, then core inflation may decline in the coming months too, particularly in the context of slowing employment growth.”
The drop in Eurozone headline inflation followed much of the preliminary data released Friday. France’s annual EU-harmonised consumer price growth shrank to 1.6pct from 1.7pct in January. Inflation also eased in Italy, falling to an annual rate of 0.3pct from 0.4pct in the previous month. German, the largest economy in the single-currency area, reported a rise in inflation to 1.7pct from 1.6pct.
G-7 talks could precurse action
In a rare move, finance ministers and central bank chiefs from the Group of Seven countries were set to conduct an unscheduled conference call Tuesday at 12.00 GMT to discuss the increasing spread of the coronavirus outbreak and its economic ramifications.
Market odds for rate cuts around the world have rocketed following last week’s sell-off in global equities, boosting the chance that rate-setters in Frankfurt will decide to send borrowing costs even further into negative territory at the next meeting of the ECB governing council on 12 March.
The Reserve Bank of Australia switched gears Tuesday by lowering its headline interest rate 25 basis points to 0.5pct after most observers said Friday that they expected the country’s central bankers to stand pat.
Some observers are even suggesting that the world’s major central banks could announce a coordinated rate cut similar to the one in October 2008 following the failure of the US bank Lehman Brothers. A former US Federal Reserve staffer predicted that the synchronised reduction will come on Wednesday.
- Headline, core CPI match estimates of 1.2pct
- Pressure grows for fiscal, monetary stimulus
Frankfurt, 3 March 2020 (LS NEWS) – Eurozone headline inflation fell last month and the core rate rose, leaving both well below the European Central Bank target of near but less than 2pct as policymakers mull new stimulus measures to counteract the economic effects of the Covid-19 virus.
February’s headline consumer price growth in the euro area matched fell to 1.2pct—the market estimate—from 1.4pct in January. The core inflation rate rose to 1.2pct from 1.1pct, as expected.
Capital Economics said the rapid spread of Covid-19 hit consumer price growth. “February’s fall in inflation reflected the decline in energy prices as a result of the coronavirus outbreak. But if the virus starts to sap domestic demand, then core inflation may decline in the coming months too, particularly in the context of slowing employment growth.”
The drop in Eurozone headline inflation followed much of the preliminary data released Friday. France’s annual EU-harmonised consumer price growth shrank to 1.6pct from 1.7pct in January. Inflation also eased in Italy, falling to an annual rate of 0.3pct from 0.4pct in the previous month. German, the largest economy in the single-currency area, reported a rise in inflation to 1.7pct from 1.6pct.
G-7 talks could precurse action
In a rare move, finance ministers and central bank chiefs from the Group of Seven countries were set to conduct an unscheduled conference call Tuesday at 12.00 GMT to discuss the increasing spread of the coronavirus outbreak and its economic ramifications.
Market odds for rate cuts around the world have rocketed following last week’s sell-off in global equities, boosting the chance that rate-setters in Frankfurt will decide to send borrowing costs even further into negative territory at the next meeting of the ECB governing council on 12 March.
The Reserve Bank of Australia switched gears Tuesday by lowering its headline interest rate 25 basis points to 0.5pct after most observers said Friday that they expected the country’s central bankers to stand pat.
Some observers are even suggesting that the world’s major central banks could announce a coordinated rate cut similar to the one in October 2008 following the failure of the US bank Lehman Brothers. A former US Federal Reserve staffer predicted that the synchronised reduction will come on Wednesday.
--- Eric Culp, European Editor
@EricCulpLS