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.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

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

COP21 Breaking News_10 December:#ParisAgreement: Points that remain in suspense

MEPs want to ensure sufficient funding for Connecting Europe’s future

This Netherlands football stadium creates its own energy and stores it in electric car batteries

“Be aware where you put your I Agree signature on and something else”; now Facebook by default opts you in an unseen private data bazar

Commuters in these cities spend more than 8 days a year stuck in traffic

Energy Union: EU’s effort towards a cleaner climate with integrated energy market

Here are 3 alternative visions for the future of work

Is the European Banking Union an impossible task?

Scotland and First Minister Salmond enter the most challenging battlefield for independence: Europe

This heroic doctor is waging war on rape and the stigma around it

“I believe that startups are for grown-up men, those, who have already achieved something “

Trump and Brexit: After the social whys the political whereto

Central African Republic: UN chief hails signing of new peace agreement

Main results of G20 summit in Buenos Aires, Argentina

In Gaza, UN envoy urges Israel, Palestinian factions to step back from brink of a war that ‘everybody will lose’

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

He died so I could live: UN peacekeeper pays tribute to fallen colleague

Costa Coffee products (Copyright: Costa Coffee; Source: Costa Coffee website, Press area)

The start of the “Caffeine rush”: Coca-Cola acquires Costa Coffee days after Nestlé-Starbucks deal

A call for a new crop of innovators

“At the Environment Assembly citizens expect clean, not hot air”, the Head of UN Environment in Europe underscores in a Sting Exclusive

European Business Summit 2013: Where Business and Politics shape the future

It’s time for cybersecurity to go pro bono

“America first” policy goes against EU-US partnership, say MEPs

Why Eurozone urgently needs the ECB to print and distribute at least €500 billion

Online platforms required by law to be more transparent with EU businesses

Norway is known for its cold weather – but it’s been in the grip of a severe heatwave

3 ways activists are being targeted by cyberattacks

New state aid rules: Commission increases national support to farmers up to €25,000

The hidden cost of the electric car boom – child labour

Climate Change : An Already Health Emergency

VW emissions scandal: EU unable to protect its consumers against large multinationals

Libya: Attack on foreign ministry, an attack on all Libyans, stresses UN envoy

The Banking Union divides deeply the European Union

Why medicine is relevant to the battle against climate change

How Europe beat the financial crisis – and the risks it still faces

New European frontiers for renewable energy development

UNICEF delivers medical supplies to Gaza in wake of deadly protests

The world’s e-waste is a huge problem. It’s also a golden opportunity

Predatory labour taxation not an issue for the Commission

Security Council renews mandates of UN force monitoring separation area between Israel and Syria; AU-UN hybrid mission in Darfur

New identity cards deliver recognition and protection for Rohingya refugees in Bangladesh

Draghi sees inflationary bubbles

Violent disorder is on the rise. Is inequality to blame?

Multilateralism: The only path to address the world’s troubles, signals Guterres

Bundesbank’s President Weidmann criticises France and the EU. Credibility at risk?

EU unfolds strategy on the Egypt question

GSMA outlines new developments for Mobile World Congress Shanghai 2018

The Fourth Industrial Revolution is driving Globalization 4.0

EU to scrutinise foreign direct investment more closely

Employers’ organizations work towards improving the enabling environment for sustainable enterprises

Africa-Europe Alliance: first projects kicked off just three months after launch

Reinforcing EU border security: Visa-exempt travelers will be pre-screened

Sub10 Systems @ MWC14: Bridging the Ethernet of the Future

ECB: The bastion of effective and equitable Europeanism keeps up quantitative easing

Our present and future tax payments usurped by banks

UN welcomes Angola’s repeal of anti-gay law, and ban on discrimination based on sexual orientation

China is a renewable energy champion. But it’s time for a new approach

Who will win the AI race? If countries work together, then the answer could be all of us

Eurozone: Avoiding a new Greek accident

The Ultimate Career Choice: General Practice Specialist

More Stings?