A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.



Eurozone FIG falls to 3-1/2 Year Low

Euro zone inflationary pressures fell in November to the lowest level in 3-1/2 years, a forward-looking indicator showed on Friday, suggesting inflation will drop sharply again in coming months.

The New York-based Economic Cycle Research Institute said its Eurozone Future Inflation Gauge, which aims to predict cyclical turns in inflation in the next six to nine months, fell to 97.9 in November from 102.1 in October.

"With the EZFIG falling to a three-and-a-half-year low, having experienced its biggest two-month decline in 33 years, Eurozone inflation is set to decline further," ECRI said in a release.

Inflationary pressures fell across three major euro zone economies, Germany, France and to a 15-year low in Spain. Price pressures rose slightly in Italy but they remained close to October's three-year low.

Official inflation in the euro zone tumbled more than expected to 1.6 percent year-on-year in December, falling below the European Central Bank's ceiling of close to but below 2.0 percent for the first time since August 2007.

A majority of economists in a Reuters poll forecast the ECB would cut rates by 50 basis points to 2.0 percent, although they aren't entirely convinced, showing only a median 51 percent probability of a 50 basis point cut.