http://www.nytimes.com/2015/01/23/business/international/ecb-unleashes-aggressive-stimulus-plan.html?action=click&contentCollection=International%20Business®ion=Footer&module=MoreInSection&pgtype=article
European Central Bank plans to buy about $69 billion, of government bonds and other debt each month to stimulus the economy. They also plan to cut the interest rate it changes on loan to commercial banks from 0.15 percent down to 0.05 percent. The expected result is that there would be an increase in inflation and growth in individual countries. Moreover, governments would also be given a share of any profit the Europe Central Bank might make. "Mario Moretti Polegato, president of the Italian shoemaker Geox, said quantitative easing could help restore a sense of optimism." Although, this is a great step the European Central bank has taken to restore the economy, this alone, in absence of the government's stimulus policy, would no be able to change much of the situation i am afraid.
2 comments:
I agree with Polegato. EU Central Banks can only do so much and this quantitative easing is more or less a temporary solution. Situation in EU won't be significantly better until situation in Ukraine improves, and we have some major policies change. I'd be expecting Germany to make a move as they have been holding EU for a long time, and now they are finally vulnerable.
Duc I agree with you. I believe that quantitative easy is a very temporary approach to aiding an economy back to health and can sometimes be hazardous to the development of a stable economy. By cutting the interest rate I believe the EU Central Banks are attempting to discourage people from saving and rather force them into spending but this could also prove to be risky as many countries are encountering tough economic times.
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