The Trader 

Market Outlook: EU must face up to the flip-side of zero rates

The Trader

July data on inflation published by Eurostat yesterday saw inflation in all too many Eurozone nations come in lower than expected and lower than June’s. For the block as a whole, HICP dropped 0.5 per cent in July dragging the annualised rate down to 1.0 per cent from 1.3 per cent the previous month. Core inflation fell by 0.6 per cent to print just 0.9 per cent in the year. In Germany, it dropped from 1.5 per cent to 1.1 per cent per annum. In Italy inflation is now running at a paltry 0.3 per cent in the year to July while Portugal has the dubious honour of the lowest reading: an annualised rate of minus 0.7 per cent. We reiterate: this means that money tomorrow buys more than it does today, in which case why should savers be recompensed with interest income?

 

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