QE pressures rising

January 7, 2015 08:13 AM

You would think the case for aggressive Eurozone quantitative easing would become a lot stronger after the Eurozone inflation rate fell to a -0.2%, which is the first decline since 2009, wouldn't you? Yet despite that you will hear clear evidence that the Eurozone is sinking deeper into deflation, the euro currency hit new lows and the employment numbers out of Germany might not make the EU path to QE as easy as one might think.

German unemployment is at a record low and already Germany's central banks, Jens Weidmann is already trying to put a positive spin on deflation saying that ultimately it is being caused by low energy prices and will be all the stimulus you need to lift the zone out of its deflationary funk.

Of course, Germany can afford to be patient, unlike the rest of the Eurozone where deflation is already taking a major toll on economic activity. While Germany is enjoying almost full employment, many countries in the rest of the zone are experiencing record unemployment. The Eurozone is also feeling uneasy over the possibility of a Greek exit from the zone that is being fanned by the Greek election and some leaked comments from German Chancellor Angela Merkel. Those fears drove the Greek 10 year yield back above 10% for the first time since September of 2013.

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About the Author

Phil Flynn is a senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. Phil is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets.