Weapon of Last Resort: ECB Considers Possible Deflation Measures (European Central Bank)

Der Spiegel ^ | April 23, 2014 – 06:18 PM | Christian Reiermann and Anne Seith

[Olog-hai]

One of European Central Bank President Mario Draghi’s most important duties is watching his mouth. One ill-considered utterance is enough to sow panic on the financial markets.

But during a press conference earlier this month, Draghi allowed himself a telling slip.

Speaking to gathered journalists at the Spring Meetings of the International Monetary Fund and the World Bank, Draghi twice almost uttered a word he has been at pains to avoid. “Defla…”, Draghi began, before stopping himself and continuing with the term “low inflation.”

Yet despite Draghi’s efforts, the specter of deflation was omnipresent in Washington during the meetings. And it is one that is making central bank heads and government officials nervous across the globe. The IMF in particular is alarmed, with Fund economists warning that there is currently up to a 20 percent risk of a eurozone-wide deflation. IMF head Christine Lagarde has called on European central bankers to “further loosen monetary policy” to address the danger. …

[SunkenCiv]

EU interest rates are too high, sez here. Thanks Olog-hai. Too few Euros in circulation. OPEC prices in Euro, has for years, just does it stealth-style. IOW, we’re going to see gasoline prices take a hop skip and jump lower, assuming that the Euro loses value against the USD. Otherwise, look for $4 a gallon gasoline, with no relief in sight, making Zero’s and Lurch’s latest idiotic stonewalling on the Keystone XL pipeline look even worse than Obamacare.