Five-year low inflation for Eurozone and now Mario has to finally wake up the Germans

Mario Draghi, President of ECB, at the press conference of G20 in February 2012. Seems he could not imagine that 2 years later the Eurozone inflation will note a five-year low. (EC Audiovisual Services, 25/02/2012)

Mario Draghi, President of ECB, at the press conference of G20 in February 2012. Seems he could not imagine that 2 years later the Eurozone inflation will note a five-year low. (EC Audiovisual Services, 25/02/2012)

The European Central Bank’s (ECB) governing council is gathering today in Naples to discuss the monetary policy just two days after the publication of the flash estimate of the annual inflation of the Euro area by Eurostat, the statistical office of the European Union. The inflation is expected to be 0.3% in September, a 0.1% drop compared to August’s estimates. This disappointing news and the weakening of the euro against the U.S. dollar will affect the agenda of the meeting by forcing the ECB’s officials to think about implementing a more radical policy. What will make inflation rise again? The annual inflation of the Eurozone continues the downfall which makes everybody nervous and increases the fears of an imminent deflation. The fact that in September it reached a five-year low means that we find ourselves in a position even worse than the one at the beginning of the global financial crisis, in terms of annual inflation at least. ECB’s inflation target, which is below but close to 2%, seems very far away from the current situation. Mario Draghi, the president of the ECB, is more than determined to use every weapon in his arsenal in order to achieve this goal. The use of the monetary easing is put into action in order to increase inflation; however it is too early to say if it is going to work or not. One thing is for sure; this is a long-term measure and we should provide the required time to see its effects on the economy. This is one of the measures that will help inflation rise again but according to Mario Draghi national governments have to add to this by making further reforms and not let the ECB alone in this battle against inflation and economic growth. Euro is losing ground against the U.S. dollar The euro/U.S. dollar currency exchange rate is showing signs of falling to crisis-levels.  This is caused by the low inflation and the monetary policy that the ECB is and will keep on following. More specifically, the euro dropped on Tuesday to its lowest figure since September 2012 at $1.2571, to recover back to $1.2630 at the end of the day. This drop though will be very helpful for the ECB’s goals to raise the inflation rates back to normal levels (close to but below 2%). What is more, the disappointing PMI manufacturing data released from the research group Markit yesterday, a day after the publication of the annual inflation report, will surely keep the euro down against the U.S. dollar. In particular, Germany’s manufacturing data dropped to 49.9 from 50.3. This fall means that Germany reached contraction levels, something that hasn’t happened to the strongest European economy the past 15 months. ECB tries but Germany is against ECB is doing its best to increase the inflation rate and provide liquidity to the market by providing interest-free loans to the banks in order to start lending. Also, another tool of the quantitative easing programme is the purchase of government bonds. However, Germany opposes to this because of the fear that this measure will have catastrophic consequences to the richest countries which will have to transfer their money to the poorest ones. Germany basically is afraid that the wealthiest economies will have to absorb the losses in case any of these countries default on their debts. On the other hand, though, the austerity model that Germany supports has proven incapable of producing growth to the EU. Thus, Germany must revise its views and give a chance to ECB’s monetary policy.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Booking.com commits to align practices presenting offers and prices with EU law following EU action

4 crazy things that are happening in the Arctic right now

How storytelling can be a force for social change

Retirees will outlive their savings by a decade

Commission reinforces tools to ensure Europe’s interests in international trade

Hostilities in Syria’s southwest, mean cuts in vital aid across Jordanian border: Senior UN official

Why informal networks will be key to the COVID-19 recovery

The Commission offers exit from the EU budget stalemate

COP21 Breaking News_04 December: Building a Sustainable Future – speech by UNEP Deputy Executive Director Ibrahim Thiaw at the LPAA Thematic Event on Buildings

UN experts decry torture of Rakhine men and boys held incommunicado by Myanmar’s military

Why cybersecurity matters more than ever during the coronavirus pandemic

Employment and Social Developments in Europe review: why social fairness and solidarity are more important than ever

Why our future relies on more inclusive and transparent innovation

Armenia should take vigorous measures against entrenched corruption

Climate action ‘both a priority and a driver of the decade’: Guterres

Politics is failing to protect the Amazon. It’s time for finance to step up instead

MWC 2016 LIVE: Getty chief says one in four new images from phones

Statement by Frans Timmermans, Executive Vice-President for the European Green Deal, on the announcement to postpone the COP26

This entrepreneur built an island resort out of plastic waste

EU Top Jobs summit ended with no agreement: welcome to Europe’s quicksand!

Reopening schools too early could spread COVID-19 even faster – especially in the developing world

EU foreign investment screening mechanism becomes fully operational

Climate change and health: Raising awareness is the key for greener actions

Draghi’s top new year resolution: Quantitative Easing

Several crises in one: what effects will COVID-19 have on the global risk landscape?

EU Summit/Migration: Parliament calls for joint solutions based on solidarity

The widely advertised hazards of the EU not that ominous; the sting is financial woes

These 4 skills can make the world better after COVID-19

What do the economic woes of Turkey, Argentina and Indonesia have in common?

We probably should go back to the therapy in Primary Healthcare

How UN cultural treasures helped set the stage for Game of Thrones

“ASEM: Global Partners for Global Challenges”, a Sting Exclusive by China’s Ambassador to the EU

Africa cannot afford to lose doctors to COVID-19

This wall of shoes is for the women killed by domestic violence

Monday’s Daily Brief: Independent UN experts on Myanmar, UN chief renounces attacks in US, Libyan airport violence, UN spokesperson on Kashmir, and FAO and Italy on development

What does ‘excess deaths’ mean – and can it give a clearer picture of the number of coronavirus fatalities?

If on a summer’s night: is UK businesses’ “new deal” the only key to the “best of all worlds”?

4 key steps towards a circular economy

Increased levels of carbon dioxide could reduce brainpower, study finds

Tsipras bewildered with Berlin’s humiliating demands; ECB expects political sign to refinance the Greek banks

How has technology changed – and changed us – in the past 20 years?

Mergers: Commission approves acquisition of Bayer’s animal health division by Elanco, subject to conditions

Companies can help solve water scarcity. Here’s how

US pardons for accused war criminals, contrary to international law: UN rights office

There is no recipe for a healthy mental state

UN condemns ‘cowardly’ attack on Libya’s national oil corporation headquarters

Civil protection: Parliament strengthens EU disaster response capability

Taking fast road to ‘e-mobility’ central to a sustainable future: COP24

‘Stop and listen’ to victims of terrorism, UN chief urges in message marking international day

Brussels enraged with Swiss referendum result to keep out EU citizens

Malaysia has achieved high levels of growth, but must do more to address governance and social challenges

PM May fosters chauvinism, declares trade war on Europe

UN Human Rights chief urges Venezuela to halt grave rights violations

COVID-19: Budget MEPs call for quick progress on post-2020 contingency plan

Hungary: Commission takes next step in the infringement procedure for non-provision of food in transit zones

DR Congo: ‘No time to lose’ says newly appointed UN Ebola response coordinator

Who cares about the unity of Ukraine?

Algorithms are being used to convict criminals and decide jail time. We need to make sure they are fair

EU to negotiate an FTA with Japan

More Stings?

Advertising