Don’t hold your breath for the press conference at the European Central Bank (ECB) in Frankfurt, Germany. Expect no proverbial “market-moving news” simply because there are no economic developments that would warrant a departure from an easy credit stance. The euro zone is experiencing a core rate of inflation between 0.9 percent and 1.2 percent. The unemployment rate in more than half of the monetary union is still stuck in a range of 9.4 percent (France) and 20.6 percent (Greece), with more than 115 million people — 23.4 percent of the population — at risk of poverty and social exclusion. Apart from that, the monetary stance has to offset the fiscal policy’s restrictive bias, because the euro zone is struggling to reduce its huge public debt (89.1 percent of GDP), and most member countries are far from official commitments to balance their public sector accounts. It is also well to remember that a central bank is not supposed to restrict the money supply under conditions of excess demand for its currency. The ECB should probably exercise a bit of pedagogy in explaining its policy markers. Anybody reading the confused European financial commentaries can see that there is a clear need… Read full this story
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