The council of the European Central Bank (ECB) continued the program of purchase of government borrowing and business for nine months. The money printer will continue working until the end of 2017, but with less speed. From April, Mario Draghi, the head of the ECB, already do not want to inject 80 billion euros per month into the eurozone, but only 60 thousand million.
however, the ECB cannot go on forever. On the one hand, are gradually running out of bonds suitable for a central bank, so each time have to lower their claims in terms of solvency and seriousness of the values. On the other, the ECB is losing the most important argument for its policy of excess money: there is no deflation in the monetary union.
Deflation: it disappears a ghost
Rolf Wenkel, from the wording of economy of DW.
Until now, the ECB has always justified its excessive monetary policy with the fight against the looming deflation in Europe. And, with it, he could hide the fact that I was actually financing to heavily indebted countries in the south of the block community. These benefit from low interest rates, which maintain their debts within a range that is bearable, and also take advantage of the money that is injected into their banking systems. Italy, for example, the third-largest economic power of Europe, has received almost 190 billion euros of the ECB, in the framework of its monetary policy ultra-relaxed.
especially in Germany, the majority of the economists look with critical eyes the stubbornness with which Draghi clings to this policy. Not only criticizing it, with an interest rate of zero percent, devalue the savings of citizens to germans, but also noted that, despite the fact that the financial conditions had never been so favorable as now, missing investments. This clearly shows that companies need attractive conditions at the level of economic policy.
The president of the Institute Ifo, based in Munich, Clemens Fuest, qualifies the intentions of the ECB to reduce the purchase of debt from April 2017 as “a step in the right direction.” From a long time ago no longer appears to be valid the argument of the ECB that the inflation rate in the euro area is too low. According to the latest forecasts from the Institute Ifo, the inflation rate of the euro will grow automatically up to march in a 1.5 per cent per year and a 1.6 percent until the end of the year.
what A “luxury problem”?
This forecast is very close to the inflation rate of two percent of the requested by the ECB. The new development of prices is due to the cessation of the fall in oil prices. “As a result, now come to light the negative side effects of the purchases of loans from the ECB”, says Fuest.
however, the Italian Draghi does not see it this way. Their statesmen are convinced that the inflation rate will not increase by 1.7 per cent before 2019. However, do not take into account the fluctuation of oil prices. In the opinion of Draghi’s, it is a “luxury problem” to think now in high rates of inflation, and the abandonment of the monetary policy relaxed.
Mario Draghi may not continue to purchase loans infinitely. It is hypocritical to tell the markets that, “if necessary”, will have to continue with the program of purchase of debt until after 2017, while, at the same time, they are demanding reforms to the governments of the eurozone. And that is precisely its announcement that the money printer will continue to work released to the heavily indebted countries of the monetary union of any pressure to implement reforms.
for a long time that this no longer has anything to do with the stabilization of the euro. To the fund the countries of southern eurozone with billions of euros, Draghi bought them time. Could it be that it does so out of conviction, or, perhaps, some heads of government do they order?
No comments:
Post a Comment