mercredi 7 janvier 2015
Quantitative easing aint so easy to quantify
Posted on 15:17 by nice news
Put yourself in the shoes of Jens Weidmann, president of the German Bundesbank and chief critic of a policy of quantitative easing (QE) for the eurozone. Now that prices are falling in euro-land for the first time since the financial crisis, are there are any credible reasons to continue to resist a programme of bond-buying by the European Central Bank (ECB)?
Well, Weidmann could start by pointing out the eurozone already enjoys two of the supposed benefits of QE – low yields on long-term government bonds and a weak currency. Even Italy can borrow at 2% for 10 years and the euro stands at a nine-year low against the dollar.
Weidmann might also argue that, while headline inflation was minus 0.2% in December, “core” inflation inched up to 0.8%. Why not wait awhile to see if lower energy prices, which puts euros in the pockets of consumers and manufacturers, boost spirits and spark growth? After all, that’s what lower oil prices usually deliver. Isn’t QE, by contrast, a step into the unknown?
None of these arguments are convincing. The eurozone has just completed another year of miserable growth (0.8% is the ECB’s own forecast) and little improvement is on the cards this year (1%, say the same forecasts). The danger of doing nothing is that it becomes harder to get out of the rut.
It is true that nobody re
Well, Weidmann could start by pointing out the eurozone already enjoys two of the supposed benefits of QE – low yields on long-term government bonds and a weak currency. Even Italy can borrow at 2% for 10 years and the euro stands at a nine-year low against the dollar.
Weidmann might also argue that, while headline inflation was minus 0.2% in December, “core” inflation inched up to 0.8%. Why not wait awhile to see if lower energy prices, which puts euros in the pockets of consumers and manufacturers, boost spirits and spark growth? After all, that’s what lower oil prices usually deliver. Isn’t QE, by contrast, a step into the unknown?
None of these arguments are convincing. The eurozone has just completed another year of miserable growth (0.8% is the ECB’s own forecast) and little improvement is on the cards this year (1%, say the same forecasts). The danger of doing nothing is that it becomes harder to get out of the rut.
It is true that nobody re
Quantitative easing aint so easy to quantify
Categories: Quantitative easing aint so easy to quantify
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