Euro area’s consumer price inflation data for September is scheduled to release tomorrow. According to a DBS Bank research report, the headline inflation is likely to have remained benign, which together with base effects, are likely to result in inflation easing to 0.9 percent year-on-year from prior month’s 1 percent.
If this forecast is realized, the headline inflation will be much below the ECB target rate of 2 percent, with official annual projections pointing towards below target inflation in the next two years, at least. Tepid inflation, along with softening growth, prodded the central bank to resume asset purchases and cut the deposit facility rates last month.
“More action is likely as the largest member country, Germany, looks set to slip into a technical recession this year and the Eurozone is on course to expand by a subdued 1 percent YoY in 2019”, added DBS Bank.
