ECB quantitative easing will harm the global economy again
- By Tan Haojun
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E-mail China.org.cn, September 14, 2014
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With the U.S. quantitative easing still in effect and the introduction of QE in Europe, the world economy has been put in jeopardy. [Xinhua photo] |
The European Central Bank (ECB) decided at a regular Governing Council meeting on Sept. 4 to lower its main interest rates by 10 basis points starting from Sept. 10. The benchmark rate was lowered to 0.05 percent, the deposit rate to minus 0.2 percent, and the loan rate to 0.3 percent. Meanwhile, the ECB will start buying asset-backed securities from October, and will unveil more details about the asset buying on Oct. 2.
READ: EU economy could suffer the same fate as Japan
The new round of quantitative easing has been seen as a way to address the EU's weak economic performance and its mounting risks of deflation.
It is worth noting that though the European economy is in deep distress, the U.S. economy is showing signs of recovery, and investors have also recovered their confidence in it. When the global financial crisis broke out, some scholars predicted that the United States would benefit most, which has proven to be true.
The ECB thus learned from their counterpart at the other side of the Atlantic, hoping that the European economy could also pull itself out of the quagmire and recover after adopting quantitative easing.
With the U.S. quantitative easing still in effect and the introduction of QE in Europe, the world economy has been put in jeopardy. Except for the developed economies, the prospects for other economies are bleak, especially the BRICS nations, which have yet to recover from the aftermath of the financial crisis.
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