Euro area inflation likely to remain below ECB target

After an improved January reading, euro area HICP inflation is likely to soften in Feb. Unlike January, where the positive base effect from the energy component pushed the headline reading higher, declines in energy prices and the absence of base effects is likely to weigh on inflation. Furthermore, food prices are expected to soften a bit in February.

Societe Generale anticipates a slightly softer core reading at 0.9% yoy in February. However, risk levels remain 'low', there are no major or imminent signs of deflation.

"We believe that the ECB will continue to act. In particular, we expect the ECB to cut the deposit rate again by 10bp in March, and we see QE extended beyond March 2017." says Societe Generale in a report.