Currency Analyst since 2010

Euro area: inflation at 5-year low

EUR/USD fell moving towards the 9-month low at $1.3366 hit yesterday as euro zone’s inflation slid from 0.5% in June to 0.4% in July, the lowest level in 5 years. CPI is now painfully close to the deflationary territory and far below the ECB’s 2% target.

This will leave the region’s central bank under pressure to keep loosening monetary policy. Some analysts, like specialists at RBC, think, however, that the regulator will choose to wait and see the effects of its latest round of measures, including a negative deposit rate and cheap long-term loans to banks, before announcing anything further.

Picture. CPI growth in the euro area

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