Deflation in the European Central Bank and the causes unpredictable jump
The European Central Bank on Thursday tried to keeps the interest rate on hold but it was noted a strong global market turmoil Central Bank and later was ready to act preventing further weakening of prices was observed. The Bank held its main rate at a record low of 0.25% for the third month in a row. President Mario Draghi said the bank needs to Bolhe longer time to understand why inflation fell again in January, as well as to assess the impact of new market turmoil in European.
Interview with Mario Draghi
"The reason for today's decision not to act can be explained by the complexity of the situation and the need acquiresbe additional information, "said Draghi at the press conference.
Economists divided over whether the ECB to cut rates, according to a statement from a variety of sources, some of the banks and the leading economists should be more likely to wait for the updated projected inflation in March. P >
"If the staff of the ECB will come to the conclusion that inflation will remain significantly below the target that is good in 2016, the ECB could go further and reduce the rate of [March]," said Berenberg economist Christian Schulz. < / p>
The pressure pushes the control of the central bank to take urgent measures more paz to stimulate activity. Slowing of inflation in the euro zone, and prevent increased risk of sliding into deflation economy may contribute to the creation of working fast enough mestkotoraya can barely growing and still not creating jobs fast enough to bring down the unemployment rate.
Consumer price inflation is less than half the target of the central bank. Slide into deflation may depress economic activity even more if the cost is deferred in anticipation of lower prices. It would also be appropriate to raise the real value of debt is much otyagoschayusche skazyvaetsyana many eurozone countries.
The answer is no, "said Draghi." But a long period of low inflation yaylyaetsya risk in itself, and this ensures careful attention by the ECB. "
Chances growth shock have also increased. The latest data from the US and Europe has been at best ambiguous. This week sawweak serial number in the US and euro-zone countries retail sales fell in December.
Emerging markets were shocked by hints of a slowdown in China, reducing the flow of cheap money from the Federal Reserve, and political instability. Some of them were forced to jack up interest rates toprotect their currencies and inflation to solve such steps that would stifle growth and hit on the export-led recovery in Europe.
"Until now, the euro zone economy and financial markets have shown a lot of stability in these events," said Draghi.
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risk appetite also fallen dramatically, as reflected in the flight of cash from the countries with the most fragile developing economies and the global stock markets.
The turbulence was seen on the night of interbank interest rates, prompting fearsThis means that European banks may even start more cautious about lending to firms and households, especially in weak eurozone countries.
Earlier Thursday, the Bank of England left interest rates unchanged, as expected. UK growth is accelerating, and is caused by a fall in unemployment, but Mapk Carney said last month that he sees no need to raise rates because the economy was far in some way from achieving the "escape velocity".