Last year, the Eurozone economy got pretty close to recession, as it was slowing together with the global economy. Inflation fell below 1%, which got the European Central Bank (ECB) panicked. They cut deposit rates further into negative territory and restarted the QE programme. Inflation improved somewhat, jumping to 1.3%, but core inflation fell to 1.1% again last month.

Manufacturing has improved a bit too, but it still remains in contraction. Now that coronavirus has broken out and is also breaking out in Europe, the economy will start weaken again, I suppose. So, the ECB is getting worried again. ECB governing council member, Gabriel Makhlouf made some comments a while ago:

• ECB will consider various options for inflation target
• ECB must avoid deanchoring of inflation expectations
• Inflation range may make ECB policy more credible
• There continues to be uncertainty about exactly what “close to, but below” means
• Have to consider whether current CPI data is helping to communicate the ECB’s objectives in the most effective way