The Spanish Economy Minister Luis de Guindos said on Friday at the Davos Forum that Spain should not worry about falling prices (-1.1% in December) because it has “the good kind of deflation”.
“Deflation is like cholesterol is good is bad. In Spain we have the good kind of deflation”, which allows to get “money in the pockets of households”. According to him, the decline in inflation into negative territory is “a positive sign that the fall of oil is reducing prices” for homes.
The Minister praised the monetary expansion plan of the European Central Bank saying that “you can not face structural problems with monetary policy. There is a powerful tool.” In this regard, he insisted that we must continue with structural reforms to encourage activity.
On Thursday, the ECB announced it would buy up to 60,000 million euros of public and private monthly debt between March 2015 and September 2016.
The objective of the ECB is to support eurozone grew 0.2% in the third quarter and is further threatened by deflation (prices fell 0.2% in December, when the inflation target is around 2%).
Asked about what might happen in legislative elections due later this year and where he could win the match left can, Guindos defended the government budget balance Conservative Mariano Rajoy.
“We are now growing, but there is no room for complacency. The Spanish voter knows that political stability is an advantage, so it will take into account these elements, and will vote corcondancia “he said.
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