Negative Rates Loom for ECB

At its monetary policy meeting on Thursday, the European Central Bank’s (ECB) President Mario Draghi is widely expected to give the euro zone’s sluggish economy a boost and halt a growth-sapping fall in prices.

In the second of our series looking at the tools at Draghi’s disposal, we examine the possibility of interest rate cuts – potentially into negative territory.

The ECB’s only job – the one it was created for – is to control inflation in the 18-country euro zone, unlike the U.S. Federal Reserve which has the power to generate jobs in its charter.  Although it is only allowed to keep a lid on rising or falling price rises, the bank also makes sure other economic conditions – such as employment or economic growth – don’t have a negative impact on inflation.


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