Yesterday’s data released from Japan and the Eurozone presented evidence that inflation is gaining traction globally. Flash number released yesterday from Eurozone showed that inflation is set to reach the European Central Bank’s (ECB) 2 percent inflation target in February. Core consumer price is set to grow 0.9 percent in January from a year ago, while the headline number is set to reach 2 percent target.

Similar showing came from Japanese consumer price report. While the headline inflation numbers are still low for Japan at 0.4 percent, core inflation as measured excluding food was up 0.1 percent and excluding both fuel and food rose by 0.2 percent in January. For the first time in a year, the core numbers were positive.

The impact of the return of inflation in these two economies are of utmost importance as the central banks of these regions can be considered as the most dovish in the world and these two central banks, ECB and the Bank of Japan (BoJ) are still pursuing their extraordinary easy monetary policies. Comments from Bundesbank chief indicates that the central bank in the Eurozone will not abruptly end its easing but stronger inflation says that a wind up would soon be on the way.