Select a language
“Deflation” is the word most feared by the European Central Bank, reports Handelsblatt, as experts begin to dread its return after figures show Eurozone's inflation rate sunk to 0.7 per cent, its lowest level in four years. “The rate is clearly below the ECB’s stability objective,” which aims to maintain inflation at 2 per cent, explains the daily.
The threat of deflation has put the ECB under pressure from financial markets, which will expect it to implement stronger measures like a further reduction of its key interest rate which has been at 0.5 per cent since May 2013 to ensure greater liquidity.
In Spain, Portugal and Cyprus, inflation is now at around 0.5 per cent, while the Greek economy has already entered deflation. The daily warns of the fatal consequences inherent in this situation —
In the event of continued downward pressure on prices, we will be faced with the risk of a downward spiral with the potential to snuff out the Eurozone's recovery.
Was this article useful? If so we are delighted!
It is freely available because we believe that the right to free and independent information is essential for democracy. But this right is not guaranteed forever, and independence comes at a cost. We need your support in order to continue publishing independent, multilingual news for all Europeans.
Discover our subscription offers and their exclusive benefits and become a member of our community now!
