Knot said the current low inflation plays in the world and also caused by low oil prices, and as a result, lower food prices. According to him, there is at the moment not ” something unique ” going on.
On sustained low inflation are risks associated, said Knot. Governments should avoid seeing, for example through reforms that stimulate growth. ” Alarming the current situation is the lack of dynamism in the economy of the euro zone. ”
Moreover, the core inflation adjusted for the low oil prices in the euro area currently around 0.8 percent According Knot. He said that by now there is a turning point in the declining lending to businesses. In the short term, there is slight credit growth.
Debt
Knot emphasized that it is difficult for households and governments to repay debt. Money, and therefore debt is worth more. In deflation The theoretical risk that consumers postpone their purchases because goods become cheaper in the future. There is also
But that has not happened yet, the DNB president says there is no deflation, at this time but low inflation.
The Chamber wants to hear from Knot and other experts as CPB director Laura van Geest what the risks of deflation now, inflation in the euro countries is so very low.
According to Van Geest is low inflation ” is not necessarily a blessing for the country ‘. They do not think people postpone their spending in hopes that prices drop. Disposable income is at that point a much more important factor, according to the CPB director.
ECB
The ECB has already taken action against the low inflation as providing cheap loans to banks and buying up bonds backed by collateral. ECB President Mario Draghi said early this month that the central bank is preparing additional measures if these steps lead to little effect.
The ECB has a target inflation but keep below 2 percent. Currently around 0.4 percent.
fluctuatesBuying up
One of those measures is buying up government bonds. About this instrument is much debate within the Executive Board of the ECB, which each national bank president of the 18 euro countries have a seat.
Germany fears that this operation, also known as quantitative easing, removes the incentive to reform and cut. Especially the southern European countries struggling with debt, the Germans want budgetary discipline come from the countries themselves.
According Knot is from European governments no need for this measure because they can already borrow cheap money. He is here “pretty skeptical” across.
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