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

the European Sting Milestones

Featured Stings

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

Young people meet in Malta to shape the future of Europe

As human caravan moves through Mexico, ‘full respect’ needed for national control of borders: UN chief

‘Continue working together’ UN chief urges DR Congo, as country heads to polls

World Cancer Day: Early cervical cancer diagnosis could save lives of over 300,000 women

UN launches plan to promote peace, inclusive growth in Africa’s Sahel

UN chief calls for ‘increased commitment’ to resolution on 10th anniversary of Georgia conflict

Eurozone at risk of home-made deflation and recession

UN refugee agency ‘deeply shocked’ at stabbing death of ‘deeply courageous’ Polish mayor

Health Education, is it a necessity?

The Brussels bureaucracy blocks the Youth Guarantee scheme

A Sting Exclusive: “Leading by example! EU must push for UN deal to avoid dangerous climate change”, European Parliament Vice-President Ulrike Lunacek cries out from Brussels

10th ASEM in Milan and the importance of being one: EU’s big challenge on the way to China

How close is the new financial Armageddon? IMF gives some hints

The big five EU telecom operators in dire straights

The Brexit factor in the US-China trade war and other conflicts

Two States ‘side-by-side’ is the ‘peaceful and just solution’ for Israel-Palestine conflict: Guterres

Fresh airstrikes kill dozens in conflict-ravaged Syria

UN and partners appeal for $920 million to meet ‘dire needs’ of Rohingya refugees

Medical Education is #NotATarget

EU Ambassadors in the EP: a multilateral approach to global challenges needed

EU budget: Making the EU fit for its role as strong global actor

The movement of anti-vaccers: taking humanity back 200 years

EU Parliament: Deposit guarantee and trading platform transparency sought

Main results of Environment Council of 09 October 2018

10 cities are predicted to gain megacity status by 2030

Why Italy will not follow the Greek road; Eurozone to change or unravel

Black Panther’s ‘General Okoye’ joins the fight against gender-based violence

MEPs call on EU countries to end precarious employment practices

The battle for the 2016 EU Budget to shake the Union; Commission and Parliament vs. Germany

‘Leaders who sanction hate speech’ encourage citizens to do likewise, UN communications chief tells Holocaust remembrance event

This project in India helps people and tigers co-exist peacefully

ILO’s Bureau for Employers´Activities to publish new study on women in business and management

It’s not summer holidays what lead to the bad August of the German economy

Investing in rural women and girls, ‘essential’ for everyone’s future: UN chief

COP21 Breaking News_03 December: Europe’s children urge leaders to commit to climate action at UN Climate Summit in Paris

European Commissioner for Youth wants young people to be at heart of policy making

The global economy isn’t working for women. Here’s what world leaders must do

Eurozone: Inflation plunge to 0.4% in July may trigger cataclysmic developments

How the United States can win back its manufacturing mojo

EYE to kick off on Friday: 8000+ young people discussing the future of Europe 1 – 2 June

India’s economy is growing fast, but its poorest areas lag behind. Here’s why this could be about to change

EU Copyright Directive: Google News threatens to leave Europe while media startups increasingly worry

Ecofin: ‘The Friday battle’ for the banking union

How fungi could save the world

UN relief official in Yemen condemns ‘horrific’ attack on passenger buses

Nigeria: UN chief ‘appalled’ by killing of aid worker; calls for release of remaining hostages

Germany openly seeks more advantages for its banks

A young student discusses the determinants of migration in the European Union

Erdogan vies to become Middle East Sultan over Khashoggi’s killing

Robots aren’t stealing all our jobs, says the World Bank’s chief economist

EU Budget 2019 deal: EP boosts support for researchers and the young

European Commission recommends to the European Council (Article 50) to find that decisive progress has been made in Brexit negotiations

European Semester Autumn Package: Bolstering inclusive and sustainable growth

Google prepares to final EU judgement over Android antitrust case

800,000 people commit suicide every year: WHO

A day in the life of a Rohingya refugee

‘Well-being of two million’ in Gaza at stake as emergency fuel runs dry: UN humanitarian coordinator

Eurozone slowly but surely builds its Banking Union

The economic cost of anti-vaccination movements in Italy

MWC 2016 LIVE: Mobile World Congress shows off planes, trams and automobiles

More Stings?