European Central Bank steps up stimulus

Mario Draghi announced on 6 November that the ECB is prepared to inject 1tr euros to stimulate the eurozone in a bid to stave off deflation.

In addition to the ‘unconventional measures’ already taken to get growth in the eurozone back on track, Mr Draghi has not ruled out further measures, including quantitative easing. The ECB is keen to be alert to the risks of Japanese-style deflation.

Inflation has recently fallen to just 0.4%, significantly below the 2% target of the ECB.

“We know the risks are on the downside and we know we need to be prepared,” Mr Draghi said. He added that the ECB could take further measures, including quantitative easing, under two circumstances: whether the measures it has taken so far were proved insufficient, or if the outlook for inflation worsened.

The euro fell to its lowest level since late 2012 at $1.2398.

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