By: HaleStewart
The European Central Bank is facing a very difficult policy environment: inflation that is too low and unemployment that is too high. Consider the following two charts:
Inflation has been decreasing for the last two years, dropping from an annual rate of 3% at the end of 2011 to .7% in the latest reading.
At the same time, unemployment has been rising, although it appears to have peaked at a little over 12% over the last nine months.
The central bank has come close to exhausting traditional policy options.
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