Europe Deflation Raises Expectation for ECB Bazooka

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Deflation fears significantly raised the prospect for the European Central Bank (ECB) to announce or initiate quantitative easing (QE) at their January 22nd meeting. This initiated a global market rally as expectations increased for a massive bazooka-style monetary stimulus injection. The catalyst was Wednesday’s announcement by the European statistics office of deflation in December for the 18-country Eurozone. Headline prices were 0.2 percent lower than a year ago, the first deflation reading since October 2009. In 2015 Central Bank actions on rates continue to be an important driver to markets. Please see Global Perspectives 2015 Forecast on rates.

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