Euro Area Inflation Recovers

European Central Bank President Mario Draghi’s bond buying bonanza has seen inflation rebound to flat after annualized CPI printed at 0.00%, out of negative territory for the first time since the 0.30% print on December 17^th.  Adding to the positive momentum was the first instance of positive loan growth in nearly 3-years as easing frees up funds for lending.  The impact of monetary policy is being broadly felt through the common currency economy but has yet to demonstrably impact unemployment.  In deference to expectations, Euro Area unemployment stood firm at 11.30% despite estimates of the number dropping to 11.20%.  Unemployment numbers in Greece and Spain remain above 20% while Italy experienced a substantial move higher, reaching 13.00% compared to 12.70% prior.  Despite the continued sell-off in German sovereign bonds, equity benchmarks managed to post gains, with the German DAX gaining 0.19%.

Bank of Canada Governor Stephen Poloz dismissed claims that the decline in energy prices will affect the long-term viability of the Canadian economy, noting that lower prices will have an impact, but also that the improving fundamentals of the US economy will help reinforce the positive outlook.  His remarks were boosted by yesterday’s month over month GDP figures which rose back to flat from -0.20% in the prior period as the figures experience tremendous volatility.  The Canadian dollar has continued to appreciate against the US dollar as the rebound in oil prices encourages a reversal in the economy.  Meanwhile, Russia moved to drop interest rates, moving the benchmark towards 12.50% from 14.00% in response to a weakening inflationary outlook and shrinking economy.  Strong ruble appreciation coupled with weaker spending has heightened the risks of Russia entering a recession.