Ambrose Evans-Pritchard: ECB's Draghi plays his last card to stave off deflation
By Ambrose Evans-Pritchard
The Telegraph, London
Thursday, March 10, 2016
The European Central Bank has pulled out all the stops to avert a dangerous deflation trap, launching a blast of triple stimulus despite angry criticism from Germany that it is entirely unnecessary and will do more harm than good.
The markets reacted wildly to the package of measures, surging at first and then plummeting on creeping fears that the bank has exhausted its policy options and may be defenseless against a fresh shock.
Mario Draghi, the ECB's president, no longer seems able to conjure confidence with his former panache. His magic has, for now, deserted him.
The ECB cut the deposit rate by 10 basis points to a historic low of -0.4 percent and stepped up the pace of quantitative easing from E60 billion to E80 billion a month. It buttressed the effect with unlimited four-year loans to banks at near-zero cost, hoping this will limit the damaging side-effects of negative rates for banks. ...
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