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Interest Rates in The Eurozone

The European Central Bank on Thursday left its benchmark interest rate unchanged, choosing to wait for additional data before deciding whether to address evidence that the euro zone is sliding into the dangerous economic condition known as deflation. Mario Draghi, the central bank’s president, acknowledged at a news conference that the 0.7 percent inflation rate in January was lower than expected and said that it would remain low over the coming months but then gradually climb back to the bank’s target of just below 2 percent. “We have to dispense with the question, ‘Is there a deflation?’ and the answer is, ‘No,’ ” he said. The E.C.B. said last month that bank lending to euro zone companies fell 2.3 percent in December from a year earlier, while the broad money supply in the euro zone grew just 1 percent, well below the 4.5 percent that the central bank believes is consistent with its price stability goals.

Source: New York Times


  1. gjeong gjeong

    I think Euro-zone is really interesting. If one country falls, then others can fall like “dominoes.” While the central government, the EU, makes everything easy for the Europeans, there is always a risk. If the EU fails to save a country from falling apart (like Greece), then everyone else can fall too.
    I think Interest Rates is extremely important because it can affect the economy heavily. They have to be really careful about their decisions.

  2. The post begs the question: what is the level of interest rates? If they’re effectively zero, as in the US, then pushing down interest rates is no longer possible. Indeed, in such cases what can monetary policy do? [A serious question – not resolved.]

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