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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (105470)	4/8/2014 7:34:57 AM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 219176

Bundesbank's Dombret: ECB Has Necessary Instruments to Counter Low Inflation 08-Apr-2014 By Christopher Lawton FRANKFURT--The European Central Bank has the necessary tools to fight low inflation, a top official from Germany's central bank said Tuesday. "If a prolonged period of low inflation emerges, the Governing Council has the necessary instruments to counteract this," Andreas Dombret, an executive board member with the Deutsche Bundesbank said ahead of this week's meetings of the International Monetary Fund. Monetary policy in the euro zone is already accommodative, Mr. Dombret added in a statement, warning that the low interest rates in the monetary bloc come with risks over time. The German central bank also welcomed the willingness of the Ukrainian authorities to undertake substantial economic and financial reforms. "These are the key prerequisites for economic stabilization of the country and for the IMF to assist Ukraine," the Bundesbank said in the statement. The euro zone has been struggling for months with low inflation, even as the ECB's key interest rates sit at all-time lows. Inflation in March in the 18 countries of the euro zone was 0.5%, the European Union's statistics agency Eurostat reported late last month. While some experts viewed the reading, more than a four-year low, as alarming, the ECB has consistently argued that the risk of deflation, defined as widespread falls in prices and wages that weigh on investment and spending, is minimal. Deflation can be disastrous for an economy as it can cause consumers to put off purchases and make repaying debt more onerous. ECB President Mario Draghi did open the door Thursday to the kind of extraordinary stimulus measures the ECB has long resisted, namely negative interest rates and large-scale bond purchases, known as Quantitative Easing. Specifically he said the 24-member board--which includes Germany's ultra-cautious Bundesbank--was "unanimous in its commitment" to deploy "unconventional instruments" at its disposal if inflation stays too low for too long. This week, however, other ECB officials have played down the need for such tools. On Monday in London, ECB executive board member Yves Mersch said the ECB sees no imminent risk of deflation, and said that he didn't see an asset-purchase program as an imminent policy step for the ECB. "QE is above all a theoretical concept," he said. "From theory to implementation is a long way." Write to Christopher Lawton at christopher.lawton@wsj.com (END) Dow Jones Newswires