End of an era as ECB set to withdraw crisis-fighting stimulus

December 13, 2018: A chapter of eurozone history will come to a close Thursday, with the European Central Bank widely expected to withdraw a key element of support for the economy while reassuring observers fearful of the growing risks.

The past three years have seen the Frankfurt institution ward off the threat of catastrophic deflation — a crippling downward spiral of prices and activity — by buying 2.6 trillion euros ($3.0 trillion) of government and corporate debt.

Policymakers say the programme has boosted growth, helped create millions of jobs and set inflation back on the path towards its target of just below 2.0 percent.

But it has also politicized the bank like never before, as disciples of fiscal rectitude in Germany and other northern countries claimed the scheme indirectly enabled spendthrift policies in the south.

The ECB “should have ended its quantitative easing (QE) programme and its negative interest rate policy a long time ago,” the director of the Flossbach von Storch institute in Cologne, Thomas Mayer, told business daily Handelsblatt.

(APP)

Posted on: 2018-12-13T11:08:00+05:00

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