ECB set to act boldly to spur recovery
Print Edition
The European Central Bank is ready to take “further decisive action” using “all available tools” to spur the eurozone’s weak recovery, its President Mario Draghi said yesterday.
Still, the ECB took no action at its monthly policy meeting, leaving its key interest rate flat at a record low of 0.25 percent. And Draghi declined to offer any more hints about what steps the bank might take in coming months.
The eurozone economy grew only 0.1 percent in the third quarter, and unemployment is high at 12.1 percent. Draghi repeated the ECB’s reassurance that it intends to keep rates at current or lower levels for an extended period of time.
Beyond that, he held the door open for more measures to boost the economy, without saying which.
Draghi said it was pointless to speculate what specific actions the ECB might take. He would say only that the bank could use any tool permitted under the European Union treaty that created the bank and the shared euro currency.
Some indicators of business activity suggest the recovery in the 18-country eurozone is strengthening gradually. Confidence among consumers and businesses about the future is on the rise, and retail sales have picked up.
But inflation is low — at only 0.8 percent, far below the ECB’s goal of just under 2 percent. Fears are growing that the eurozone could fall into a deflationary spiral, in which falling prices choke off growth. That’s what happened in Japan in the 1990s.
Draghi said the ECB does not see deflation in the eurozone: “We are not in a Japanese scenario.”
He warned, however, that policymakers should be vigilant.
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