Draghi: Are we finished

Livewire News


Draghi: Are we finished? The answer is no. Europe is flirting with deflation, a persistent, broad-based decline in prices, which is a bad thing for economic growth. Low inflation has made it expensive to borrow and Europe's troubled banking system isn't supplying credit, a further drag on the economy. The ECB today pushed its already low policy rate from 0.25 to 0.15%. More importantly, however, it pushed the overnight deposit rate, into negative territory. In effect, the ECB is now charging financial entities to leave their money at the bank. This was the headline amongst a number of other stimulus measures. Equity markets rallied in Europe and the US. The Euro declined indicating Draghi's intentions were well received. Time will tell if these latest measures have been sufficient. Draghi, however, is preparing to do more: We think it's a significant package. Are we finished? The answer is no. (VIEW LINK)

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