The more the world changes, the more it doesn’t. The European Central Bank (ECB) is saying Quantitative Easing (QE) is coming as inflation flirts with flipping to negative while the Bundesbank says not so fast, a little negative inflation is not deflation.
“For me, a few months of inflation rates below zero does not constitute deflation. That would require a self-perpetuating downward spiral of negative inflation rates, GDP declines and wage declines,” Jens Weidmann, president of Germany’s Bundesbank and a member of the ECB’s governing council, told reporters Monday. “This risk remains minimal.” Wall Street Journal, “Europe’s Deflation Struggle Intensifies,” 12-17-2014 by Paul Hannon.
It is interesting to see the Euro take a renewed plunge after the weak inflation numbers and strong ECB executive member statement that QE was coming early next year. The Fed’s modestly dovish statement did not move the needle like the ECB’s statement.