Münchau, W., (2013), “The eurozone needs to get inflation up again”, The Financial Times, 10 Νοεμβρίου.
What surprised me last week was not the European Central Bank’s decision to cut interest rates, but that so few people had expected it. That is astonishing since the ECB is certain to fall short of its inflation target – achieving an annual rate of close to 2 per cent in the medium term. Mario Draghi, president of the ECB, himself admitted as much last week that the central bank will only meet its target in “medium-to-long-term”. The big problem for him is not the reported fall in the annual headline rate of 0.7 per cent in October; this rate jumps about. It is the fall in core inflation, the rate excluding volatile items, to 0.8 per cent.
The ECB’s monetary policy decisions raise a number of questions. Will lower interest rates work? Will it help end the crisis? Can the ECB do all the heavy lifting alone? And how serious is the deflation threat anyway?
The answer to the first two questions is yes, it will work, and no, it will not end the crisis. Debt resolution remains necessary. Economic policies will need to change. But this does not imply that monetary policy is ineffective – not even now when interest rates are close to zero.
Για όλο το άρθρο, πατήστε εδώ.
Σχετικές Αναρτήσεις
- Cohen-Setton, J., (2013), “Blogs review: The deflationary bias of Germany’s current account”, Bruegel, 06 Νοεμβρίου.
- Münchau, W., (2013), “Optimism about an end to the euro crisis is wrong”, The Financial Times, 27 Οκτωβρίου.
- Rehn, O., (2013), “Turning Germany’s surplus into a win-win for the Eurozone”, Olli Rehn’s blog, 11 Νοεμβρίου.