Euro Inflation Slows as Draghi Hints at More ECB Stimulus.

http://www.bloomberg.com/news/2014-08-29/euro-area-inflation-slows-as-draghi-hints-at-more-ecb-stimulus.html

Euro-area inflation slowed in August and the region’s unemployment rate remained close to a record, increasing pressure on the European Central Bank to take action to kindle the bloc’s faltering recovery.

Consumer prices rose 0.3 percent in August from a year earlier after a 0.4 percent increase in July, the European Union’s statistics office in Luxembourg said today. That’s the weakest rate since October 2009 and in line with the median forecast in a Bloomberg News survey. Unemployment (UMRTEMU) remained at 11.5 percent in July, Eurostat said in a separate report.

Today’s data add to the case for more stimulus when policy makers meet next week. ECB President Mario Draghi has pointed to sliding investor bets on prices, sparking a debate about whether quantitative easing is needed to steer inflation in the 18-nation region back toward the ECB’s goal of just under 2 percent and foster economic growth.

“This is yet another bad indicator of the health of the euro-zone economy,” said Luke Bartholomew, an investment manager at Aberdeen Asset Management. “As every month passes we get closer to the dread of deflation and Draghi looks more and more like Nero fiddling while Rome burns.”

“It’s no secret that we are seeing somewhat of a downturn in the economy,” Nowotny told reporters in Alpbach, Austria, late yesterday. Germany’s economy shrank 0.2 percent in the second quarter,France’s stagnated and Italy fell back into recession.

While French Prime Minister Manuel Valls said this week that the ECB needs to use all means at its disposal to lift inflation to its target level, German Finance Minister Wolfgang Schaeuble said in a Bloomberg Television interview it’s the responsibility of governments to spur growth because the ECB has run out of ways to help the euro area.

The unemployment rate varied across the 18-nation euro area in July, ranging from a low of 4.9 percent in Germany and Austria to 24.5 percent in Spain.

“The long-term cohesion of the euro area depends on each country in the union achieving a sustainably high level of employment,” Draghi said in his Aug. 22 speech at the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole, Wyoming. “Unemployment is at the heart of the macro dynamics that shape short and medium-term inflation.”

European Central Bank President Mario Draghi has pointed to sliding investor bets on prices, sparking a debate about whether quantitative easing is needed to steer inflation in the 18-nation region back toward the ECB’s goal of just under 2 percent and foster economic growth.