European Central Bank policy meeting that will be held on Thursday, September 4th next day will be one of the most anticipated economic events. Because the recovery faltered amid Eurozone. Eurozone inflation rate continues to drop after the ECB's policy rate cuts last June.
Draghi_fokus
haunted by Failure
Inflation in the economy of 9.6 trillion euros, drop to a low level of five years, ie 0.3 per cent in August. Day by day, the central bank in an effort to avoid a Japanese-style deflation, getting close to failure.
Increased risk due to the more intense geopolitical conflict in Ukraine, forcing Europe to impose sanctions against the three largest business partner, Russia. No doubt, this decision was to backfire for the euro zone's economic recovery that basically is still limping along.
Frederick Ducrozet, an economist at Credit Agricole told Reuters, "the ECB again under pressure to take more action (effective). Not only because of weak inflation data, but also due to the content of Draghi's speech at Jackson Hole yesterday."
It is known, in his speech, Draghi wooing governments Eurozone countries to work together to ease the burden on the ECB by means of structural economic reforms.
However, economic analysts predict that the ECB will not take any action in its meeting this month. One is Marco Valli, chief economist at UniCredit Millan Euro Area. Bloomberg, the man said that this month the ECB will still consider the possibility that additional stimulus would be too premature.
According to him, Draghi looks more like spread rhetoric that shows that he was very concerned about inflation expectations. Overcoming the problem of inflation by increasing the quantitative easing as already unstoppable. Still, Draghi emphasized that merely easing the final step.
Problems faced by the ECB is not a new problem in the world economy. The US's central bank, Japan, and the UK have also experienced similar problems. Instead of learning from the experience of neighbors, the ECB is reluctant to follow the example of the solution actually looks ever taken by one of the central bank. Reuters analyst estimates, it is caused by the strong opposition of the German central bank, which was going to be the most burdened if the policy is launched. In addition, there is also the consideration that the purchase of sovereign debt in multinational like that, it would be difficult to implement.
Thus, a Bloomberg survey says that 50 of the 55 voices predicting that the ECB will keep interest rates at a record low 12:15 per cent today. While the other five will be re-estimated if the ECB cut interest rates as much as 00:05 basis points from the current level.
