Following a dramatic fall in the price of oil, now down at $50 per barrel from above $115 in the middle of last year, euro zone inflation figures for December are likely to turn negative for the first time since 2009.
German inflation figures for December will presage the euro zone number on Wednesday, together offering one of the final pieces of the jigsaw for the European Central Bank before its late January policy meeting at which it could commence a quantitative easing government bond-buying programme.
European Central Bank President Mario Draghi pushed the envelope as far as he could last week, saying a review early next year would decide whether money-printing to buy government bonds was needed. He said he didn’t need unanimity within the ECB to force it through.
Euro zone finance ministers meet in Brussels to discuss member states’ 2015 budget plans. We know the European Commission thinks France, Italy and Belgium are breaking EU deficit rules but will defer decisions on any action until March. At that point, France could face a multi-billion euro fine and Italy and Belgium be put on a disciplinary programme.
The European Central Bank meets today with the debate about quantitative easing running hot after Mario Draghi declared “excessively low” inflation had to be raised fast and that the ECB would act more forcefully if its existing efforts to pump money into the ailing euro zone economy fall short.
After European Central Bank chief Mario Draghi managed to mend fences and get his colleagues to sign up to his 1 trillion euros or so target to push into the ailing euro zone economy, Paris hosts its version of the Jackson Hole central bankers meeting.
It’s ECB day. While the Federal Reserve has called time on its bond-buying and the Bank of Japan decided to create money at a more furious rate, the euro zone central bank will plot the middle course – waiting to gauge the impact of its recent efforts to pump more money into the currency bloc’s economy before entertaining further action.