A weekend article from the the Financial Times (gated, but can be read with a free registration): Eurozone inflation trend raises alarm at ECB on Draghi’s comments at Jackson Hole (Draghi: If inflation drop continues, risks for price stability would increase and governing council would need to use all available tools):

  • The most closely watched measure of markets’ eurozone inflation expectations – the average rate expected over five years starting in five years’ time – fell to 1.95 per cent on Friday, according to Barclays. Similar levels have not been seen since the eurozone debt crisis was at its most intense. At the start of August the measure stood at 2.11 per cent.
  • Late on Friday, Mario Draghi, ECB president, said the bank “will acknowledge these developments” – comments that are likely to fuel speculation it will take bolder action against deflation threats.

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EUR/USD is lower this morning, along with a stronger USD across the board.