Euro economy may get bigger push from ECB
Euro economy may get bigger push from ECB
Published: 11:47 am Sep 02, 2015
Frankfurt, September 1 When is a trillion euros not enough? Could be soon, in Europe’s shaky economy. Analysts are already talking about when and how the European Central Bank (ECB) might extend its 1.1 trillion-euro ($1.2 trillion) stimulus programme that has been running for the past six months in an attempt to boost the modest recovery in the 19 countries that use the euro. They say ECB President Mario Draghi will likely use his news conference on Thursday to underline the bank’s willingness to increase its efforts, if needed, to push up stubbornly weak inflation or limit any damage from the economic troubles in China. The stimulus programme is slated to run through September 2016, in monthly purchases of 60 billion euros of government and corporate bonds. The effort, called quantitative easing, or QE, pumps newly printed money into the economy. It is aimed at raising a rate of inflation that is so low as to provoke fears about the health of the economy. Yet, the impact of the ECB’s programme remains unclear. Despite major tail winds from low oil prices, a weak euro and massive central bank stimulus, the eurozone’s economic recovery remains tepid. On the upside, banks are lending a bit more to companies. But on the negative side:
- Inflation is stuck at a low 0.2 per cent, a sign demand is too weak to drive up prices.
- The latest survey of eurozone business and consumer confidence ticked up in August. But it increased in only 11 of the 19 euro countries. In seven of them, it fell, including the biggest, Germany. One country, Ireland, did not report data.
- Unemployment, at 10.9 per cent in July, is edging down only slowly. And huge disparities remain between countries — Germany has a record low rate of 4.7 per cent while Greece’s is around 25 per cent.
- Economic growth was a modest 0.3 per cent in the second quarter.