Patrick Artus, Natixis’ Chief Economist, writes for International Financing Review on the European Central Bank’s (ECB) real objective behind it’s use of quantitative easing (QE).
The intention of the ECB is to bring eurozone inflation back towards the 2% target by means of an increasingly expansionary monetary policy. Artus, however, argues that QE is instead plaguing the region with excess liquidity, which in turn is causing high volatility in asset prices share prices, long-term interest rates and credit spreads.
Indeed, this high volatility may discourage corporate investment, curtailing growth rather than boosting it, while continuing to have no effect on inflation. Such economic woes make us wonder why the ECB is putting the European economy at risk, while also conducting a monetary programme which will not produce its desired results.
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