Economic sentiment in the European zone recorded an increase last month but the inflation rate is still at a negative level. This indicates that rising economic sentiment is expected to grow slowly as some tax cuts are withdrawn, oil prices rise again and the economy has begun to recover.
Inflation in 19 countries in Europe was unchanged at a negative level of 0.3% in December. This reading is much lower than economists expect but it is in line with the projections set by the European Central Bank.
The euro economy is expected to decline further in the fourth quarter and inflation has remained below zero since August last year. The ECB has recently approved a stimulus package that will increase the purchase of substantial assets by 2022. The move is to protect the economy in the face of the impact of Covid-19.
These measures are expected to keep loan costs at a low rate in the coming years and provide assistance for the bloc to face stricter movement control measures.
Economic sentiment rose to 90.4 points in December from 87.7 in November. This reading is also higher than the European Commission expects to target only 90.0 points.
Inflation targeted at 2% since 2013 seems very difficult to achieve and is expected to decline further next year and will not achieve the bank's objectives for the coming years as recovery from the outbreak will be prolonged.
The Euro depreciated against the US dollar by 0.41% to 1.2273 as of 9.10 p.m
