Pressure continues to build on the ECB to act. As discussed earlier (see post), the central bank may remain on the sidelines for some time, but the latest developments (listed below) make this inaction increasingly difficult.1. Declining Liquidity: The…
According to the Conference Board, disinflationary pressures are not limited to the Eurozone and can be seen across a large number of the “developed economies”. The so-called “Harmonized Indexes of Consumer Prices” or HICP (a measure of inflation that has been standardized based on the EU definition) seems to show consumer prices weakening broadly, with only a couple of exceptions
There must be some café in Brussels where all the most inept U.S. financial journalists meet with to get their take on eurozone deflation.
Given the situation, most central bankers would take action. A simple policy change for example could be to suspend the sterilization of securities already held by Eurosystem – see post. But the ECB is hesitating. Why?
So far today U.S. stocks aren’t celebrating the 5-year anniversary of the bull market, which technically speaking began on March 9, 2009.
So far the ECB has not responded to the disinflationary risks building in the euro area. Some Governing Council members dismissed the calls for action from numerous economists, referring to the analysts’ reports as the “Anglo-Saxon” irrational fea…
An economy like Spain is suffering from grotesquely inadequate demand. Monetary policy can make things worse, but it cannot produce a rapid recovery in such circumstances. Fiscal policy can.
It may be something symbolic such as a small rate cut or possibly a more substantial move such as a new LTRO program (discussed here), but the European Central Bank will be forced to loosen monetary policy in the near future. Here are the reasons…
The Eurozone’s “Nascent” Recovery
By William K. Black On January 19, 2014 I posted a column entitled “Deflation: The Failed Macroeconomic Paradigm Plumbs New Depths of Self-Parody” that discussed the insanity of the Eurozone’s approach to “the threat of deflation.” The EU’s troika cannot … Continue reading →
Economic indicators continue to point the Fed staying the course with the policy of “small taper” (see post) – a gradual reduction in securities purchases. Behind all the noisy economic data over the past month, one key measure is telling the central b…
