• Inflation in the euro area has been on a downward trajectory since September 2012. If inflation moves even lower and the risk of deflation increases, it could add pressure on the ECB to cut interest rates further.
• The recent decline in inflation is caused partly by the fall out of last year’s tax hikes. After a period of fiscal tightening where substantial tax hikes in a number of countries pushed headline inflation up, this temporary effect is now vanishing.
Read the full report: Market Research
Danske Bank