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Eurozone Current Account Balance Falls

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Eurozone Current Account Balance Falls

The European Central Bank has released details of the February Current Account figure, this has come in at €21.9bn, slightly down on last months €25.3bn. Additionally, Italy has just published trade figures for the same month. The Italian Global Trade Balance for February is €2.62, this is sharply lower than the January reading of €3.65bn, however a figure closer to €1.27bn was all that had been anticipated. Italy’s trade balance with the Eurozone is €1.253bn representing an improvement on last months €1.262bn.

The European Central Bank (ECB) came under significant pressure over the weekend at the spring International Monetary Fund (IMF) conference. IMF officials, Finance Ministers and Central Bankers from around the globe rounded on the ECB for allowing the eurozone slip further towards a deflationary situation.

Subsequent to the IMF conference the ECB chair, Mario Draghi, came out on the defensive, in a speech earlier this week he conceded that the Eurozone is not making sufficient progress in it’s ongoing battle against disinflation. Draghi however attempted to turn the focus onto the single currency exchange rate, he estimated that the appreciating Euro had shaved 0.4% to 0.5% off the Eurozone rate of inflation over the past 18 months.

Draghi went on to openly state that the Eurozone ‘requires further monetary stimulus’. The obvious implication here being that the ECB is willing and prepared to cut interest rates at the next possible juncture. The narrative now has moved on from the ‘will they, wont they’ that has dominated the conversation since the beginning of this year. The question is now more around how much monetary stimulus the ECB will introduce and what form this may take.

In light of the IMF pressure placed on the ECB, commentators are now beginning to speculate that Bank will take the Eurozone into negative interest rate territory.

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