Thursday, November 3, 2011
ECB Cuts Interest Rates as New Chief Draghi Takes Bold Step
Mario Draghi wasted no time with new policy after recently being elected European Central Bank. In July, a controversial increase in the key interest rate from 1.25% to 1.50% was criticized because of the already weak economy in the Eurozone though counter acting inflation. Chief Draghi lowered the interest rate back down to 1.25% in his first meeting at Chief. This move seems like a bold decision to many, but lets see if bold decisions is what the Eurozone needs to climb out of this economic funk.
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With the European economy so shaky it's likely a good thing that there is new leadership and bold decisions being made. Hopefully with cuts like this and with providing assistance to the banks in trouble, Europe will be able to avoid a recession. That's the last thing the global economy needs.
ReplyDeleteWhile people are worried about inflation due to the interest rate cut, the state of the European economy is the most critical thing currently. The cut in the interest rate will not cause a huge amount of inflation and though inflation is above their target, it is relatively low. The cut aims to help Europe's economy, which is what it should be focusing on now.
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