By Abdulselam Durdak
Frankfurt letter, Feb. 6

- Will rising inflation force the ECB to change its monetary stance?

Euro area annual inflation is expected to be 1.8 percent in January 2017, up from 1.1 percent in December 2016, according to a flash estimate from Eurostat, the statistical office of the European Union.

The inflation rate in the euro zone is rapidly approaching the ECB’s target of just under 2 percent, but the recent strong rise is mainly due to base-effects from volatility in commodity prices.

President of the European Central Bank (ECB) Mario Draghi made very clear in his last press conference that for the ECB to change its policy stance, the bank would look for a durable and self-sustained convergence of inflation towards the target of “below, but close to 2 percent” across the whole Eurozone over the medium-term.

Furthermore, in January, the inflation rate without the volatile prices of energy, food, alcohol and tobacco was unchanged at 0.9 percent.

Euro area gross domestic product (GDP) figures were also encouraging. Seasonally adjusted GDP grew 0.5 percent quarter-on-quarter in the fourth quarter, faster than the 0.4 percent expansion seen in the third quarter.


- News from Germany

Deutsche Bank posted a net loss of 1.4 billion euros last year. Experts say this is a result of past scandals. Speaking at an annual conference, the Chief Executive of Deutsche Bank apologized for legacy issues that costed billions of euros for the bank.

"These legacy issues have not only cost us a lot of money; they have also cost us dearly in terms of reputation and trust," he said.

Chief Executive John Cryan expressed “deep regret for what happened. "Therefore I would like to take this opportunity to express, also on behalf of the Management Board of Deutsche Bank, our deep regret for what happened. We would like to apologize sincerely," he added. 


-The week ahead

This week, markets will continue to monitor the ECB's Governing Council Members’ speeches. As usual the “Trump effect” and Brexit talks will be on the top of the agenda for investors.


Information on the data side will be slim during the week.

06 Feb,2017