US Treasury Secretary Urges Europe to Boost Demand

The US Treasury Secretary has urged eurozone countries to “boost demand” in order to reduce unemployment and avoid deflation.

Jack Lew was speaking at a meeting of the G20 group, which includes several of the world’s largest economies.

Earlier this month, the European Central Bank introduced new measures to stimulate the area’s flagging economy.

However it has stopped short of adopting the policies favoured by its US counterpart, the Federal Reserve.

As well as launching an asset purchase programme, through which it will buy debt products from banks, the ECB cut its benchmark interest rate to 0.05%.

The bank has been under pressure to kick-start the eurozone economy, as manufacturing output has slowed and inflation has fallen to just 0.3%.

“Europe is going to need to solve its problems and resolve differences it has internally,” Mr Lew told reporters at the meeting in Australia, “but what’s clear from the US experience is that the combination of taking action to boost demand in the short run and make structural changes for the long run is an important combination, and it shouldn’t become a choice between the two.

“You really need to pursue both.”

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza