The European Central Bank: Time to be bold

Posted: May 23, 2014 in economy
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India’s strongman

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The European Central Bank


Having promised action, the central bank will have to deliver it in June

ALTHOUGH the European Central Bank (ECB) is often accused of timidity, it has nonetheless acted decisively on occasion, notably by pledging in 2012 to buy unlimited amounts of government bonds under siege from the markets. Still untested, this commitment is widely credited with saving the euro. Now the ECB faces a different danger from a long spell of low inflation, currently just 0.7%, well below its target of almost 2%. The longer this persists the greater the risk of a slide into deflation, imperilling countries laden with excessive debt. When the bank’s governing council meets on June 5th it is likely to adopt a battery of measures to counter “lowflation”.
After the council’s meeting in May Mario Draghi, the ECB’s president, came close to pre-announcing bold action in June. The council only waited, he said, to see the bank’s next round of economic forecasts. These seem sure to show …

via Economic Crisis


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