having steered open crisis ecb navigates dangers
Last Updated : GMT 20:32:53
Arab Today, arab today
Arab Today, arab today

Having steered open crisis, ECB navigates dangers

Arab Today, arab today

Arab Today, arab today Having steered open crisis, ECB navigates dangers

President of the European Central Bank attends a press conference
Paris - AFP

The European Central Bank unveiled a new arsenal of monetary policy weapons on Thursday, this time aimed not at calming panicked markets threatening the eurozone, but the more subtle danger of deflation.
"We are not in a moment of acute crisis but something more concealed and potentially more dangerous," said Isabelle Job-Bazille, director of economic research at French bank Credit Agricole.
ECB chief Mario Draghi rolled out an unprecedented package of measures, including negative interest rates and targeted measures to kickstart lending to businesses, as well as indicating plans for a limited foray into asset purchases similar to those by US, Japanese and British central banks.
Draghi is widely credited with saving the euro two years ago when panicky markets threatened to push countries into defaults that could have led to a complete collapse of the eurozone.
At the time, he announced the ECB was ready to step in and buy eurozone bonds on a massive scale if necessary -- a promise which calmed markets and helped ensure that such intervention was not actually necessary.
At first glance the eurozone seems to be in a much better situation: bailed-out countries have weaned themselves off international aid and growth is returning.
But "the recovery is very fragile, very weak", said Job-Bazille.
With unemployment high and lots of slack in the economy, the gradual drop in inflation has raised concerns that an unexpected shock, like a sharp slowdown in China or a full-blown conflict in Ukraine, could push the eurozone into outright deflation.
Eurozone inflation slowed to just 0.5 percent in May, a long way off the 2.0 percent that the ECB defines as price stability, and growth came in at an anaemic 0.2 percent in the first quarter.
Policymakers and markets had been looking for the ECB to take some action, both to guard against deflation and spur bank lending, the slow pace of which has been holding back a recovery.
"It is better to prevent than treat deflation," said Job-Bazille.
During a period of deflation, or a sustained period of falling prices, people and businesses tend to postpone purchases while hoping for further price declines in the future.
It can thus push an economy into a vicious spiral of falling growth and rising unemployment that is notoriously difficult to reverse.
Japan has only just managed to extract itself from two decades of deflation with a massively expansionary fiscal and monetary policy.
- ECB faced 'economic urgency' -
While not exactly quick off the blocks -- or as bold in its actions as the Bank of Japan --  the ECB has followed through on plans it had earlier outlined for tackling deflation.
It lowered rates overall, including taking the deposit rate into negative territory for the first time, to minus 0.10 percent.
By moving the rate at which the central bank pays commercial bnks for depositing their unused cash into negative territory, they will thus be charged for parking funds at the ECB, hopefully prompting them to instead lend it to businesses and consumers.
Banks will be able to tap up to 400 billion euros ($550 billion) that they should lend to businesses, and the ECB said it was stepping up preparations to begin purchasing asset-backed securities.
This is far from the massive asset purchases undertaken by the US Federal Reserve, Bank of England and Bank of Japan, but it would be major step for the ECB.
Targeted purchases of securities linked to commercial loans might help banks step up lending. It also allows the ECB to avoid purchasing government bonds, which put it on thin ice given its mandate not to directly finance governments.
The ECB's measures were "exceptional and certainly respond to the economic urgency that has yet to be understood by all," said analyst Christopher Dembik at Saxo Banque

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

having steered open crisis ecb navigates dangers having steered open crisis ecb navigates dangers

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

having steered open crisis ecb navigates dangers having steered open crisis ecb navigates dangers

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today PNG police start removing refugees

GMT 03:00 2017 Friday ,24 November

PNG police start removing refugees
Arab Today, arab today Sophian Yussef reveals suitable decoration

GMT 02:56 2017 Thursday ,23 November

Sophian Yussef reveals suitable decoration
Arab Today, arab today Syria congress to go ahead

GMT 02:24 2017 Friday ,24 November

Syria congress to go ahead
Arab Today, arab today IS media offline for a day

GMT 02:10 2017 Friday ,24 November

IS media offline for a day
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Human form of 'mad cow' disease

GMT 00:11 2017 Friday ,24 November

Human form of 'mad cow' disease
Arab Today, arab today British woman jailed in Iran to appear

GMT 03:19 2017 Friday ,24 November

British woman jailed in Iran to appear
Arab Today, arab today 'Trash islands' off Central America indicate

GMT 20:19 2017 Friday ,24 November

'Trash islands' off Central America indicate
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Mitsubishi Materials units falsified product

GMT 03:24 2017 Friday ,24 November

Mitsubishi Materials units falsified product
Arab Today, arab today 'Robo-taxis' hold promise, and perils

GMT 08:07 2017 Thursday ,23 November

'Robo-taxis' hold promise, and perils
Arab Today, arab today Solaf happy for participating in “Hotline”

GMT 07:56 2017 Wednesday ,22 November

Solaf happy for participating in “Hotline”
Arab Today, arab today Delhi half-marathon to go ahead

GMT 03:51 2017 Saturday ,18 November

Delhi half-marathon to go ahead

GMT 08:03 2017 Tuesday ,21 November

Abeer Sabry reveals reason of “The Flood” success

GMT 08:03 2017 Thursday ,23 November

Srebrenica women cry tears of joy

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts

GMT 09:12 2017 Thursday ,23 November

4 in 10 cancers due to modifiable risk

GMT 10:47 2017 Wednesday ,22 November

The Big Apple bike boom

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday