Inflation remains well-contained across most developed markets. Commodity prices, especially oil, have declined, supporting lower inflation but also creating disruptions for energy and resources stocks. Deflation is a concern in Europe, with even the regional heavyweight Germany now having tipped into negative price inflation. This has led the European Central Bank (ECB) to announce that it will buy €60 billion of bonds each month from March 2015 until the latter part of 2016. Initial market reaction has been positive and the FTSE 100 is now at 6,871 having started the year at 6,566. Only time will tell if the more complex characteristics of the stimulus package, such as the loss sharing policies between national central banks, will prove to be workable.
February 4th, 2015, by Georgina Ogilvie-Jones