ECB unlikely to loosen its policy stance
Mohamed A. El-Erian | 12 Apr 2019 00:30
The European Central Bank (ECB), after sharply revising downward its baseline growth projections and seeing no decisive lifting of the downside risks, could be tempted to signal at its Governing Council meeting this week that it will pursue a further loosening of its monetary policy stance.
That would be consistent with the bank's record under the determined and bold leadership of President Mario Draghi, who hasn’t been shy about using unconventional measures to keep the euro zone from slipping into deflation.
But the ECB is likely to, and should, refrain from such a move this time due to a growing appreciation of the costs and unintended consequences of the much-delayed handoff to a more comprehensive policy response.
There is increased recognition of the difficult 2019 outlook for the euro zone, which faces both internal and external challenges.
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