Saturday, April 12, 2014
ECB Concedes that Deflation Is a Worry Requiring Immediate Action
Mario Draghi conceded that he is worried about deflation and is prepared to move toward unconventional monetary policy to combat it. He blames the strength of the euro and speaks of the need for "monetary stimulus" to combat it. According to the Financial Times, however, the plan is not to buy assets on the open market, as the Federal Reserve has done, but to cut interest rates on deposits by banks with the ECB, possibly into negative rate territory, which would effectively be a tax on these deposits.