Reuters Insider - Low inflation builds case for ECB easing

Baader Bank AG

02/12/2015 16:31

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        As the ECB prepares for its next monetary policy  
                     decision, latest euro zone data shows inflation as 
                     weaker than expected in November.                 
 
 
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Transcript (May be auto-generated)

                 Even those too old for Santa might still believe in Mario Draghi. Traders - even
the most jaded amongst them - expecting an early Christmas present from the ECB 
chief. European stocks at a three-month high as they price it in. Baader Bank's 
Robert Halver. It's very good news for the German stock exchange. The 
liquidity-driven rally goes on and of course cheaper money is helpful for the 
economy. Most predict a deposit rate cut and a boost to the ECB's asset-buying 
program this Thursday. But there is a contrarian view, record low German 
unemployment perhaps one reason why the ECB shouldn't ease. The latest euro zone
manufacturing figures - described by many 

as 'not so bad' - another. Justin Urquhart-Stewart of Seven Investment 
Management. If I were him, I wouldn't use any more gunpowder for the time being.
I would reserve it till year, because I fear at the moment things are going OK, 
but it's growth, it's slower growth around the world. So I fear we may be 
looking at next year not so much a world economy that stops, but actually one 
which looks a lot more sluggish. That's when he'll need the extra QE money. 
Inflation, though - or the lack of it across the euro zone - may well clinch the
case for easing. The latest reading lower than expected. And factory gate prices
sharply negative on the year. One positive for the ECB is euro-dollar, it's at a
seven-month low. If the Fed hikes as expected this month, parity's seen as 
distinctly possible. A lower currency a boost to exports - and a welcome festive
gift for Mario Draghi