ECB's Nowotny says he sees no deflation risks - But parts of the Eurozone are already suffering

Ewald Nowotny is on less than top form this morning.

The National Bank of Austria president says the he expects higher Eurozone growth to raise inflation in the region in 2015.

While inflation should remain under two per cent, he says, he does not expect to see inflation or deflation in the euro area.

We'd like to draw Nowotny's attention to this Eurostat chart, released on 16 January:

Countries in the euro area are already seeing deflation, and many aren't far off.

This is precisely the sort of thing the IMF's Christine Lagarde warned of when speaking of "deflationary ogres" last week. The overall trend in the euro area is a disinflationary one.

Admittedly, those at the European Central Bank have a near impossible task - devising a coherent monetary policy for the disparate economies of the Eurozone is a task we wouldn't wish on our worst enemies.

While Nowotny talks about expansionary monetary policy, the ECB's efforts don't match up to these words. Aggregate demand has been allowed to collapse, and falling prices in many parts of the Eurozone reflect that.

It's not necessarily the deflation Nowotny ought to be worried about, but the outright failure of the ECB to stabilise demand that's cause for alarm.