Euro Little Changed After Negative CPI in Line With ECB Rhetoric
- Eurozone CPI Estimate drops below expectations to negative -0.10%
- Core CPI remained unchanged at 0.90%
The Euro was little changed versus the US Dollar after today’s CPI data showed inflation unexpectedly turned negative in September for the first time in six months. Consumer prices fell to -0.10 percent, below the 0.0 percent expected by economists. Core inflation, which tracks the change in the price of goods and services excluding food, energy, alcohol, and tobacco remained unchanged at 0.9 percent, as expected.
At the beginning of the month, ECB’s President Mario Draghi said it wouldn’t be a surprise to see inflation turn negative in the coming months due to transitory effects, namely lower energy prices. The central bank is ready to expand its quantitative-easing program on a weaker inflation outlook, yet with core CPI remaining unchanged, the market seemed to interpret the negative number as transitory and in line with Draghi’s past rhetoric.
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