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Avent, Ryan

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The Economist - United Kingdom | 14/08/2012

ECB's inflation policy is wrong approach

The inflation policy of the European Central Bank is also to blame for the impending recession in the Eurozone, Ryan Avent argues in the blog of the liberal weekly The Economist: "The ECB has permitted this dangerous slowdown because it focuses obsessively on inflation, and consumer price inflation has been above 2% since late 2010. That's a potentially fatal error. Plummeting demand will eventually bring inflation down, at the cost, perhaps, of unsustainably painful contractions around the periphery. Meanwhile, the ECB's choice to preside over a steady slowdown in demand growth, and a consequent squeeze on the periphery, is exacerbating the financial crisis and putting great pressure on ECB officials to take all sorts of extraordinary action. The inflation obsession is leaving the central bank more involved in the economy and more politically overextended than it would be if it focused on maintaining stable growth in demand."

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