I’ve been trying to get around to this article for a couple of hours now … and here it is.
The question of the impact of lower oil prices in the ECB stimulus debate.
- The ECB Governing Council meets this week (December 4)
- The members will have to consider how the fall in oil prices will impact on inflation expectations, and what to do about it
- German council member Jens Weidmann signaled how oil is now a focal point in the quantitative-easing debate
- He suggested last week that the drop in energy costs is like a mini stimulus package, suggesting no need for the ECB to expand its current measures
- The opposing view, previously argued by Draghi and ECB Chief Economist Peter Praet, is that temporary price shocks can deliver lasting harm to an economy as feeble as the euro area’s
The fall in oil
- “makes forceful ECB action more likely,” said Holger Sandte, chief European analyst at Nordea Markets in Copenhagen
- “Later out in 2015, we might see positive impacts on the economy from the lower energy prices but that won’t stop the doves on the Governing Council pushing for action”
