Arab Today, arab today no taboos for ecb when tackling weak inflation
Last Updated : GMT 05:58:37
Arab Today, arab today
Arab Today, arab today

ECB's chief economist Peter Praet:

'No taboos' for ECB when tackling weak inflation

Arab Today, arab today

Arab Today, arab today 'No taboos' for ECB when tackling weak inflation

ECB's chief economist Peter Praet
Frankfurt - Arab Today

There are "no taboos" for the European Central Bank when it comes to finding ways to push up the chronically low level of inflation in the euro area, the ECB's chief economist Peter Praet told AFP in an interview.

"There are no taboos," Praet said, pointing among other issues on the table to the ECB's contested bond purchase programme, known as quantitative easing or QE.

There is a growing risk that inflation in the eurozone will not return to levels conducive to healthy economic growth by 2017, as initially forecast, Praet admitted.

The central bank is having an "in-depth 360-degrees reflection" on the measures needed to push inflation back to just below 2.0 percent, Praet added.

"We are in a situation where the timeframe for achieving the inflation objective risks once again to be moved back," the Belgian economist said.

"We will assess this in December, notably in light of the new macroeconomic staff projections."

- Ready to act -

His comments came just days after ECB president Mario Draghi signalled that the central bank could be ready to ramp up its contested QE programme to boost inflation in the 19 countries that share the euro.

At the ECB's regular policy meeting last week, Draghi said the bank was ready to use all monetary policy ammunition at its disposal and would re-examine its policy stance in December.

"The governing council has given a very strong message: it is ready to draw the consequences of its assessment of the monetary policy stance," Praet said.

"The president has asked the teams to re-examine the toolbox and to have an in-depth 360-degrees reflection."

In March, the ECB launched a scheme to buy more than 1.1 trillion euros in sovereign bonds at a rate of 60 billion euros per month at least until September 2016, in order to kick-start inflation, which slowed to minus 0.1 percent in September.

The ECB has already slashed its key interest rates to historically low levels -- cutting the bottom rate, known as the deposit rate, to minus 0.20 percent, bringing interest rates into negative territory for the first time.

That means banks now have to pay to park cash overnight at the ECB's deposit facility.

Draghi, who had previously said that eurozone interest rates had reached their lower bound, last week said a possible further reduction of the deposit rate was back on the table.

Praet said the ECB was examining its own experience and that of other central banks with negative interest rates.

"The impact on the economy is positive. Regarding banks, we can see that there is a negative impact on unit margins, but banks also benefit from the impact on the economy in general," he said.

-  Small risk of deflation -

The ECB is worried about the strength and the persistance of factors putting downward pressure on inflation, such as falling oil prices and the economic slowdown underway in China.

However, the risk of deflation -- which is a dangerous downward spiral of falling prices -- is "very small", Praet said.

"However, the risk of seeping into a low-growth and low inflation regime is real," he said.

While falling prices might appear to be good for consumers, they can be poisonous to the economy. The fear is that deflation could become entrenched if consumers delay purchases in the hope of lower prices later, which in turn prompts companies to hold off investment, creating a vicious circle of falling demand and fewer jobs.

Asked whether the ECB's current policy measures were effective, Praet replied: "With regard to credit, yes. With regard to financing conditions, yes. With regard the economy, yes.

"However, the transmission to the price dynamics takes more time, notably in a context of lower oil prices," Praet said.

Praet called on eurozone governments to accelerate their economic reforms.

Given the slow growth seen in the single currency area in recent years, "the answer is to embark on structural reforms," he said.
Source: AFP

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*

Arab Today, arab today no taboos for ecb when tackling weak inflation Arab Today, arab today no taboos for ecb when tackling weak inflation

 



Arab Today, arab today
Arab Today, arab today Fadi Kataya explains secrets of  Nancy Ajram's newlook
Arab Today, arab today Messi visit will contribute in tourism

GMT 14:04 2017 Friday ,24 February

Messi visit will contribute in tourism
Arab Today, arab today Expresses Algerian history by woody figures

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures
Arab Today, arab today Mental conflict endures

GMT 07:36 2017 Friday ,24 February

Mental conflict endures

GMT 22:38 2017 Friday ,17 February

Investment promotion would be Sahar Nasr's main task

GMT 13:17 2017 Wednesday ,15 February

Yemeni accuses militias of challenging oil

GMT 09:12 2017 Saturday ,11 February

Algorithms: the managers of our digital lives

GMT 09:07 2017 Saturday ,11 February

The biggest players today on Wall Street? Algorithms

GMT 08:15 2017 Saturday ,11 February

Tesla chief in public feud with auto workers union

GMT 06:23 2017 Thursday ,09 February

Oil market can cope with higher shale output

GMT 14:10 2017 Friday ,03 February

Reasons of growth rate conflicting numbers
View News in Arabic - Business: حوارات وتقارير
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Reading therapy relieves mental disorders

GMT 15:39 2017 Friday ,24 February

Reading therapy relieves mental disorders
Arab Today, arab today UK appoints 1st Scotland Yard chief in 188 years

GMT 05:14 2017 Thursday ,23 February

UK appoints 1st Scotland Yard chief in 188 years
Arab Today, arab today Ex-yoga missionary unleashes rage

GMT 12:16 2017 Thursday ,23 February

Ex-yoga missionary unleashes rage
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Tesla back into red but revenue grows

GMT 07:27 2017 Thursday ,23 February

Tesla back into red but revenue grows
Arab Today, arab today Nissan enhances sales in most markets

GMT 14:08 2017 Monday ,20 February

Nissan enhances sales in most markets
Arab Today, arab today Wafaa Amer is happy for Sherihan’s return

GMT 07:36 2017 Wednesday ,22 February

Wafaa Amer is happy for Sherihan’s return
Arab Today, arab today Milan laughs while Rome cries

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries

GMT 05:19 2017 Tuesday ,21 February

Salma Rashid happy for 'A Whisper of Love'

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby

GMT 22:42 2017 Thursday ,23 February

Nasima Gamei revives heritage in jewelries

GMT 15:53 2017 Tuesday ,21 February

Small ponds have outsized impact

GMT 20:33 2017 Friday ,17 February

To release new antiques collection

GMT 07:51 2017 Wednesday ,22 February

Mom's immune system accepts babies

GMT 09:59 2017 Monday ,20 February

Tourism shows signs of recovery

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 20:02 2017 Tuesday ,21 February

Nohan Seyam designs beautiful accessories
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