June 5, 2014

IT'S A DEFLATIONARY EPOCH:

European Central Bank Takes a Radical Step (JACK EWING, JUNE 5, 2014, NY Times)

The European Central Bank cut its benchmark interest rate to a record low on Thursday and, in an unprecedented attempt to stimulate the euro zone economy, said it would begin charging interest on deposits held by the bank.

The so-called negative deposit rate has never been tried on such a large scale and is a bid to push down the value of the euro and encourage banks to invest excess cash rather than hoard it in central bank vaults. [...]

Many economists have already criticized the moves, which were widely expected, as inadequate to combat the deflation threat that Mr. Draghi has acknowledged.
Posted by at June 5, 2014 3:51 PM
  
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