Thursday, October 31, 2013

UPDATED--Flash estimate: Euro area annual inflation down to 0.7 %

This could get troublesome.
From BusinessWeek:
Europe Gets a Halloween Scare on Inflation
Europe got a double dose of spooky news on Oct. 31, as new data showed inflation in the euro currency zone plunged to an unexpected 0.7 per cent during October, a four-year-low, while unemployment in September held steady at a record-high 12.2 per cent.

The inflation report ramps up pressure on the European Central Bank to cut interest rates, possibly as early as its meeting Nov. 7. October marks the ninth consecutive month that inflation has fallen below the bank’s 2 per cent target. “Even if the ECB were to keep rates on hold in November, we would still see a high chance of a rate cut in December,” London-based economists for UBS said in a note to clients. Most economist polled by Bloomberg News predict the bank will act in December, cutting the refinancing rate from the current 0.5 per cent to 0.25 per cent.

The euro currency dropped sharply on the news, trading at $1.36 against the dollar at midday in New York. “There was a big downward surprise,” Vassili Serebriakov,” a foreign-exchange strategist at BNP Paribas in New York, told Bloomberg News. “Markets build up long positions in the euro too quickly.” ...MORE
Here's the release from eurostat.
UPDATE: ""Spectre of destructive deflation looms over eurozone: analysts""