The ECB should take more measures if inflation stagnates, the OECD says – Yahoo Finance Spain

By Leigh Thomas

PARIS (Reuters) – The European Central Bank (ECB) might have to relax monetary policy further if inflation does not begins to pick up as expected, and governments should find ways to remove bad loans from banks to help economies to make the most of the stimulus from the central bank, said the coming OECD.

While UK approaches a vote on June 23 on its membership of the EU, the Organisation for Economic Co-operation and Development (OECD), based in Paris, he estimated that a Brexit subtract one percent of the domestic product gross EU in 2018.

in some reports in depth of the euro zone and the European Union, the OECD said any negative economic shock lay the foundations so that there was more relief for the ECB to maintain inflation on track to achieve its lower but close to 2 percent target.

“the ECB could consider additional rate cuts, especially the type of deposits, because it is the type most importnate in a excess liquidity environment, “the OECD said.

Driven by its program of asset purchases and ultra-low interest rates around the ECB currently it expects inflation to rise to 1.2 percent the year that comes from 0.2 percent this year.

However, the OECD said the weakness of some banks’ balance sheets, mainly concentrated in Greece and Italy, was preventing the benefits of monetary policy lax reach businesses and consumers.

the OECD suggested imposing capital charges these banks to encourage them to get rid of non-performing loans, for example by creating a European management company funds to buy them, and that both can benefit from economies of scale and diversify risks.

it is unlikely that the recommendation feels good in Germany, where many taxpayers already have the impression that they are paying the bill profligacy of governments south.

the OECD estimated that the euro zone could grow 1.6 percent this year and 1.7 percent next, if UK voted in favor of staying in the EU.

the entire EU economy will behave a bit better, with growth of 1.8 percent this year and 1.9 percent in 2017, without the risk of Brexit.