Eurozone economy sees a slow start to 2016

Data firm Markit released earlier today showed a slowdown in manufacturing and services activity in the eurozone in January. Markit manufacturing Purchasing Managers' Index hit a three-month low at 52.3, while its services PMI reached a 12-month low at 53.6.

Growing concerns about the durability of the US growth outlook and major geopolitical risks around Europe, both external and internal, including the ongoing migration crisis, the Russian-Ukraine conflict, terrorist attacks/threats and rising populists and centrifugal-forces in Europe has cooled the pace of growth in euro area business activity at the start of 2016.

The plunge in the oil price to below $30 per barrel means that CPI inflation could average as little as 0.2 percent this year - well below the ECB's current forecast of 1 per cent. In the current scenario, the ECB looks likely to revise down inflation projections in March from the current level of 1 per cent for 2016 and 1.6 per cent for 2017. Concerns over the poor inflation outlook have certainly increased the chances of the ECB eventually providing more policy support.