ECB makes no policy change despite disinflation risks

Peter Spence
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The European Central Bank is by now well aware of its inflation problem - but it's still doing nothing about it.

No change in policy this month, as widely expected by analysts.

That's despite widely recognised disinflation risks. The only real sign of inflation in the Eurozone is the number of times Draghi refers to it.

While Europe's economic recovery stumbles on, Nancy Curtin, chief investment officer at Close Brothers Asset Management, says that the euro area still has deep rooted underlying problems, as "inflation remains disturbingly low".

The ECB's inactivity is a product of its "inflation target and a framework built on consensus and realpolitik", says Societe Generale's Sebastien Galy. That structure leaves the ECB "slow to react in the absence of urgency", says Galy.

If we're going to see the ECB react, then the first change will probably come next month. The arrival of new economic forecasts will put focus firmly on that meeting.

World First's Jeremy Cook points out that the ECB last cut rates in November, a month before December's forecast revisions.