Eurozone Deflation May Be the Final Push for European Central Bank Bond-Buying Plan
The eurozone’s dip into deflation has member countries leaning hard on the European Central Bank to roll out a bond-buying program to jolt the economy, an option that Germany has strongly opposed. But analysts say in light of the gloomy economic figures, the question now isn’t whether the ECB will take the leap - but how.
“I think it’s inevitable now,” said Alexander Privitera, director of the business and economics program at the American Institute for Contemporary German Studies at Johns Hopkins University. “[The ECB] can’t take any chances anymore. It wouldn’t make sense to wait forever.”
Official figures released Wednesday showed that prices in the eurozone fell by 0.2 percent in December compared with a year earlier, largely spurred by slumping oil prices. Pressure has been mounting on ECB President Mario Draghi for months to introduce a fresh round of quantitative easing - printing money to buy government bonds - and Draghi has indicated he might finally pull the trigger.