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Takeaway: Will the ECB act or not? It's all about inflation.

Editor's Note: Below is a brief excerpt from an institutional research note written by Hedgeye Macro analyst Matthew Hedrick titled, "Top 7 Reasons Why the ECB Will Act on March 10th." To read more of our Macro team's research ping sales@hedgeye.com.

Will Super Mario (Draghi) Act At The Next ECB Meeting? - Draghi cartoon 11.12.2015

  1. It’s All About Inflation!  Or lack thereof… Not only is the ECB nowhere near its 2.0% inflation target, CPI is negative!  In the initial February reading, Eurozone CPI fell to -0.20% Y/Y vs Expectations for 0.00% and Prior +0.30%. This is the first time inflation went into negative territory since September 2015. #GravityHurts
  2. Producer Price Index, like CPI, mirrors the deflationary forces, most currently at -2.9% JAN Y/Y, and has been in negative territory since July 2013!  (see Super Mario chart below) 

Will Super Mario (Draghi) Act At The Next ECB Meeting? - super mario