While global conditions have been less than optimal, inflation in the Eurozone should not be a point of concern at the moment, especially in its impact on the regions monetary policy. The four countries in the chart below account for about 80% of the Eurozone, and only one of which (Germany) has a 3m/3m annualized harmonized index of consumer prices (HICP) growth over 1%.

These low inflation rates should ease any worries over near-term rate hikes. The ECB targets an inflation rate of “below but close to” 2%. This means that while the bank may slowly tighten its policy over the next year or two given the state of other aspects of the economy, there will be no rush to do so on account of inflation. For the Eurozone as a whole, the picture is similar to the big four. As shown in the chart below, the broader MoM core HICP has not risen over 1% annualized for 6 of the last 8 months.