Dow Jones Market Wrap Reports:
The European Central Bank is preparing additional measures should the euro zone slide into deflation, its president said Thursday, making clear that the central bank is concerned that muted price pressures could undermine the currency bloc's fragile recovery.
Mario Draghi also added a powerful voice to increasing concerns among policy makers that the strength of the euro is affecting inflation. That could prompt the ECB to potentially implement measures designed to weaken the common currency.
The European Central Bank is preparing additional measures should the euro zone slide into deflation, its president said Thursday, making clear that the central bank is concerned that muted price pressures could undermine the currency bloc's fragile recovery.
Mario Draghi also added a powerful voice to increasing concerns among policy makers that the strength of the euro is affecting inflation. That could prompt the ECB to potentially implement measures designed to weaken the common currency.
While the risk of deflation in the euro zone is quite limited, the longer that inflation in the monetary bloc remains low, the higher the probability of such risks emerging, Mr. Draghi in a speech in Vienna.
A deflationary spiral in the EU mirrors the two decade long economic stasis of Japan. The devaluation of euro based assets will be correlated to a devaluation of the euro currently under consideration by the ECB.
SME's with supply chain, market exposures or asset valuations linked to a deflationary trend in the EU need to be wary of this emerging macroeconomic risk factor.
Download Sum2's Macroeconomic Risk and Event App (MERA) on Google Play to assess your company's macro risk factors and what you can do to profit from them.
Risk: currency, economic, political, market, supply chain
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