European Central Bank under pressure

The chief economist of the European Central Bank (ECB), Jürgen Stark, has warned of the risks of permanently low interest rates, saying that if the ECB keeps the base interest rate too low for too long this could delay necessary adjustments in the banking sector and the economy as a whole. The liberal conservative daily Corriere della Sera sees the ECB under pressure to act: "Germany's growth of over 3.6 percent in 2010 makes raising the extremely low base interest rate an obvious step if there is to be a return to normality. The difficulties of countries on the periphery, on the other hand, are forcing the ECB to throw money around on the market. … Yet in this situation the purchase of government bonds is less worrying than the fact that the ECB is no longer in a position to decide in favour of the monetary policy it considers appropriate to the macro-economic conditions of the Eurozone."

» more information (external link, Italian)
More from the press review on the subject » Fiscal Policy, » Banks, » Economy, » Germany, » Europe
All available articles from » Francesco Giavazzi

» To the complete press review of Friday, January 21, 2011