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By HaleStewart March 6, 2014 8:29 am
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The ECB Drops The Policy Ball

Today we learned the the ECB is maintaining their overall low interest rate policy.  This, at a time, when several major economic statistics are literally screaming the need to engage in additional stimulus. 

Consider the following graphs:

Overall inflation has dropped from 2.7% two years ago to readings between .7% and .8% over the last five months.

The unemployment rate has been elevated at 12% for over a year.

Business credit demand is non-existent.

While the ECB is probably relying on the recent positive GDP reports and strong Markit surveys as signs the economy is "turning the corner," there is a profound underlying weakness to the EU economy that is threatening the current strong growth numbers.  The ECB needs to do more to overcome the above noted problems. 

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer

 

 

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