What's going on?

The European Central Bank (ECB) has been trying to boost economic growth and inflation in recent years (e.g. by directly buying government bonds). Data out on Monday suggests it�s only having moderate success.

What does this mean?

The eurozone�s economy grew 0.3% in the third quarter � the same rate it did in the second quarter (which is low by historical standards but higher than it�s been growing in recent years). The data did show that overall inflation hit a two-year high, but the higher oil price had a lot to do with that. The so-called �core� rate of inflation, which strips out the effect of energy prices and other volatile items, is lower than it was earlier this year and didn�t accelerate versus last month. All in all, it suggests the eurozone economy is chugging along, but there�s plenty more work to do in order to get it back on a healthier footing.

Why should I care?

The bigger picture: A little bit more inflation would be a very good thing.
Since inflation is the rate at which the value of money erodes (i.e. �100 buys you less stuff over time), it�s also the rate at which the value of debt erodes. For countries and companies that are heavily in debt � as many in Europe are � it would be very helpful if their debt was eroding more quickly (and good for the economy because it would free up money to do things like hire more workers).


For markets: The ECB will be wary of reducing its bond buying program unless �core� inflation is accelerating.
Bond buying is meant to help increase inflation. In theory, it lowers overall interest rates (how? click here), and thus encourages companies to borrow and spend money. All that spending should help businesses raise prices and, thus, boost inflation. The ECB is currently thinking of changing the amount of bonds it buys each month, which would be like altering its degree of aggressiveness. If �core� inflation isn�t moving up, the ECB might be loathe to decrease its bond buying (decreased bond buying would likely be bad for bond prices and could hurt stock prices too – for more on how low interest rates affect investments, click here).