Summary for the 28th of June 2019
The low inflation problem in the Eurozone is difficult to find the reason for. The economic activity and the employment growth haven’t affected the hourly earnings and inflation rate as much as they used to be. The problem is troublesome for central banks that are using inflation target as their monetary policy, where they are depending on market demands and expectations to achieve the inflation goal. The economic models the ECB are using couldn’t quite explain the recent low inflation growth. Mario Draghi talked last week about how globalization and digitalization could be the reasons. Lower global economic growth due to geopolitical uncertainty, raising protectionism and weakness from the emerging markets could also have led companies to be more careful of rising their sale prices, just so they could keep their market share. Released consumer price index from Germany showed an increase by 0.2% to 1.6% in June, the market expected an unchanged price index. Though, the core i...