REPORT
By Abdulselam Durdak
Frankfurt letter, April 10

ECB: Too early to declare victory on inflation

 

The Eurozone, which includes 19 EU members that adopted the euro as their common currency, struggled with very slow inflation and low growth rates in the past.

The European Central Bank (ECB), which is responsible for managing monetary policy in the euro area, is targeting inflation in the region of just below but close 2 percent to maintain price stability in the region. The ECB is also implementing some measures, including an asset purchase program and low-interest policy to this end.

The latest data from the Eurozone indicated that economic recovery in the region revived and inflation gained momentum.

In particular, the 2 percent headline inflation in the second month of the year triggered the view that the ECB would gradually end measures that it had put in place.

However, ECB officials say the core inflation rate is still low and that it is too early to declare a "victory" in inflation. In addition, the bank wants the underlying dynamics of inflation to become more stable.

Overall, both the dynamics of headline inflation and the low rate of core inflation indicate that the bank has not yet achieved what it had set out. Therefore, the bank is expected to continue its measures for a while and closely monitor inflationary developments.

 

-News from Germany

German industrial production and trade surplus rose in February.

Germany exported goods to the value of €102.3 billion and imported goods to the value of €82.4 billion in February 2017.

Based on provisional data, the Federal Statistical Office (Destatis) also reports that German exports increased by 3.1 percent and imports by 3.7 percent in February 2017 year-on- year.

Exports and imports showed diverging month-on-month trends on a calendar and seasonally adjusted basis. While exports rose by 0.8 percent in January 2017, imports were down 1.6 percent.

The foreign trade balance showed a surplus of €19.9 billion in February 2017. In February 2016, the surplus amounted to €19.8 billion.

In calendar and seasonally adjusted terms, the foreign trade balance recorded a surplus of €21.0 billion in February 2017.

Furthermore, in February 2017, production in industry was up by 2.2 percent from the previous month on a price, seasonally and working-day adjusted basis, according to provisional data of the Destatis.

 

Abdulselam Durdak

 

AA - Frankfurt

 

 

 

 

 

 

10 Apr,2017

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