Euro Zone Inflation Plunged Heavily to 0.6% in March...

The word is out and Deflation it is! Trichet on various occasions denied the fact that the euro area might be facing deflation for sometime affected by the prolonged failure of crude prices to stabilize above $50 per barrel and the continuous weakening global demand.

After those data, everything is possible; we cannot deny that threats of deflation are increasing, jeopardizing the left stability in the euro area, especially the United Kingdom and United States officially stated that deflation threats are about to materialize on real their economy. Due to that the those two economies were obligated to start purchasing long-term debts in order to balance between the surging short-term rates and severe fall in the long-term rates.

We recently said that Trichet will be obligated to use unorthodox methods just to keep going, and dear reader its true, considering all the steps taken I think before the second half of this year we would see Trichet considering new types of actions to prevent his sixteen economies from heading into deeper issues.

Previously Trichet said that cutting rates rapidly won't be taking place, yet with time moving on he proved to us that he had to let down all those believes, where he trimmed their benchmark down for five consecutive times taking it down to the record lows at 1.50% .

Yet looks like that it won't stop at those levels, where markets anticipate a further cut on Thursday taking it down to 1.00%. All sectors across the zone have tumbled badly struggling with prolonged contraction that will expend further this year.

Additional rate cuts needed in order just to synchronize with the vast fall in consumer prices, where today we've have seen the CPI flash estimate plunging heavily down to a rise of 0.6% from the previous 1.2%. This fall might come to ensure Trichet recent speech where he said inflationary pressures will fall into negative levels temporarily but will pick up in a short period, which I really doubt!

Consumer Prices eased in Italy down to 1.2% in March reaching to record lows from the previous 1.6%, with the yearly CPI EU-harmonized retreating heavily down to 1.0% from the previous 1.5%. The fall in prices would be in the consumer benefits in the normal phases, but after sectors, trimmed jobs just cut expenses the situation differed. Consumers no longer care about prices after they reduced their spending levels the most believing that the worst is yet come.

To make worsen the situation, we have seen today the Spanish housing prices fell in the in the fourth quarter 3.1%, to show a deeper fall on the yearly prices falling with 5.4%. Spain the fourth European leading economy continues to struggle with their housing destruction after they previously lived in a huge housing boom!

On the contrary, the European indices had dropped the fear that was seen earlier this week, to incline in today's session giving us hope that it would close in green. Dow Jones euro stoxx added 1.50% or 30.23 points reaching 2040.84 levels, along with the French CAC 40 index adding 1.61% reaching 2762.81 levels and the German DAX adding 1.38% reaching 4044.34 levels.

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