Deflation is coming to Europe
REUTERS/Tyrone Siu
As well as cutting growth forecasts for Europe and warning about big risks from emerging markets, Draghi warned that Europe could fall into deflation in the coming months.
He said: "We may see negative numbers of inflation in the coming months, but this will be a transitory phenomena due to low oil prices."
Europe fell into deflation - prices of consumer goods falling, rather than rising - in December last year, only getting out in April.
Inflation at the moment is running around 0.2%, way below the 2% the ECB is targeting. The forecast for inflation this year was cut from 0.3% to just 0.1%. Europe's GDP growth forecast was also cut from 1.9% to 1.7%.
Things have got worse in recent weeks because of the chaos in China and volatility in stock markets. Investors have been piling into the "safe haven" euro. The knock on effect of a strong euro is exports are more expensive, meaning there's less money coming into countries.
With less money to go around, price rises are slowing - and could even slip to deflation. As a result, analysts thought Draghi could extend or ramp up the programme of quantitative easing in Europe, first introduced 6 months ago.
He certainly signalled his willingness to do so, but really his tactic seems to be killing the euro with his words. All the dovish comments are currently hammering the euro.
Investing.com
- A couple accidentally shipped their cat in an Amazon return package. It arrived safely 6 days later, hundreds of miles away.
- A centenarian who starts her day with gentle exercise and loves walks shares 5 longevity tips, including staying single
- 2 states where home prices are falling because there are too many houses and not enough buyers
- "To sit and talk in the box...!" Kohli's message to critics as RCB wrecks GT in IPL Match 45
- 7 Nutritious and flavourful tiffin ideas to pack for school
- India's e-commerce market set to skyrocket as the country's digital economy surges to USD 1 Trillion by 2030
- Top 5 places to visit near Rishikesh
- Indian economy remains in bright spot: Ministry of Finance
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market