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ECB Inflation Fight Won’t be Won with Euro 

December 1, 2015

Richard Barley, The Wall Street Journal

For Europe, 2015 is ending much as it began: with intense expectation of action from Mario Draghi and the European Central Bank. But as the ECB delves ever further into unconventional territory, the considerations for policy makers are growing more complex.

From a purely economic point of view, the urgency with which the ECB president has been approaching further easing has been puzzling. Eurozone growth has held up in the face of global wobbles, core inflation has been moving slowly up and forward-looking indicators suggest continued progress. It isn’t even clear that boosting bond purchases or cutting rates further will significantly affect the underlying economy.

But market expectations of action are high—and were building even before Mr. Draghi’s recent dovish comments. That reflects the real fight the ECB has on its hands: one related to perceptions of its ability to bring inflation back to its target of “below, but close to” 2%. Read more

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