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The European Central Bank has let it happen. Inflation has been running at an annual rate of minus 1.5% in the eurozone over the past five months, adjusted for austerity taxes.

[np_storybar title=”Are investors underestimating eurozone risk?” link=”http://business.financialpost.com/2014/04/03/are-investors-underestimating-eurozone-risk/”]Funding costs for eurozone countries haven’t been this cheap in years, but an economist Desjardins is cautioning the party might not last. Read on

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Prices have been falling at a rate of 5.6% in Italy, 4.7% in Spain, 4% in Portugal and 2% in Holland since September. The rise of the euro against the dollar, yen, yuan and real, accounts for some of this. The eurozone’s trade-weighted index has risen 6% in a year.

But that is the direct consequence of the ECB’s own monetary policy. Frankfurt could force down the euro at any time by switching gears. It has chosen not to do so, hoping that a few dovish words spoken without conviction will turn the global tide.