Quantitative easing: Turning over a new leaf?

Posted: March 26, 2014 in economy
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The mood towards unconventional monetary policy in Europe is changing—but only very slowlyNORDIC and Germanic opposition to unconventional monetary policy is crumbling, so it seems. On March 25th, in interviews with Market News and the Wall Street Journal, two of the more hawkish members of the European Central Bank’s governing council hinted that further monetary easing may be on the cards for the euro area. The euro obligingly sank on foreign-exchange markets.First, Jens Weidmann, president of the German Bundesbank, told Market News that quantitative easing was no longer “out of the question”, having previously ruled it out as a legitimate policy tool for the ECB. Then, Erkki Liikanen, Governor of the Bank of Finland, also seemed to open the door to this type of policy. He told the Wall Street Journal that, even with interest rates at 0.5%, “we haven’t exhausted our manoeuvering room” on monetary policy, and that “the question of negative deposit rates, in my mind, isn’t any longer a controversial issue”.Other members of the ECB’s governing council also seem to be more open to using a more unconventional range of policy tools. Jozef Makuch, the governor of the National Bank of Slovakia, said yesterday that quantitative easing was one option being considered, and said that there was growing support for reflationary policies: “Several policy makers are ready to …

via Economic Crisis http://ift.tt/1rzQ8uC

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