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  On 6 March, the ECB will publish its macroeconomic forecasts. At the same time the Governing Council will decide its monetary policy in the Eurozone.As Mr Draghi stressed in February, the ECB's inflation forecasts will be critical for the ECB's future monetary stance. Indeed, should the ECB's inflation forecast for 2016 indicate a return towards 2%, an easing stimulus would not be necessary. On the other hand, if the ECB recognised that low inflation is set to continue until 2016, the ECB would need to ease further.

Before predicting what the ECB might do, it could be worth to take a closer look at the deflationary pressures that are plaguing the Eurozone. These pressures usually stem from a lack of demand or an excess in supply. The demand-driven deflation occurs when declining outputs lead to rising unemployment and declining wage growth, while companies lower prices to retain demand. Needless to say, such deflation pressures are negative as they tend to feed on themselves, forming a vicious circle, making the process of bringing inflation back to desired levels difficult and lengthy (as can be seen in Japan). Supply-driven deflation occurs when, for example, improved productivity or new technologies makes aggregate supply grows faster than demand. Such pressures are positive as they lead to higher buying power for the consumer, which is healthy for the economy. Furthermore, as GDP is boosted by the supply shock, a return of inflation to desired levels is much easier. Looking at the Eurozone, both type of deflation pressures have been at work. The historically high unemployment and the decline in wage growth in many European countries confirm demand-driven deflationary pressures. On the other hand, the production boom in the energy sector has also brought supply-driven deflationary pressures.