Tepid inflation offers Draghi first clue for more stimulus

Frankfurt

MARIO Draghi is about to receive his first major clue of 2016 on whether the euro area needs more stimulus.

Inflation picked up to 0.4 per cent in January from 0.2 per cent the previous month, according to a Bloomberg survey before data due on Friday. While that would be the highest rate in 15 months, it's still only a fraction of the goal of just under 2 per cent - a target the European Central Bank (ECB) president hasn't met in nearly three years.

Plummeting oil prices and a China-led slowdown in emerging markets have dimmed hopes for an inflation rebound in the 19-nation euro area, and Mr Draghi has warned that the rate may even fall below zero in coming months. Persistent declines in the cost of crude and other commodities have become increasingly correlated with weaker inflation expectations, meaning their deterioration could warrant another expansion of quantitati…