QE in the euro zone

By THE DATA TEAM

THE European Central Bank is poised to take a momentous decision when its governing council meets in Frankfurt this Thursday. The ECB is expected to embark upon a big programme of quantitative easing, the creation of money to buy financial assets. The economic case for QE is strong. The recovery since the double-dip recession between late 2011 and early 2013 has been weak and faltering, while inflation has tumbled, with consumer prices actually falling in the year to December. The ECB has sought to combat “lowflation” through a variety of means, including charging banks that leave money on deposit with it through negative rates. But what it has not done is what other central banks have tried, which is to carry out a big QE programme, which would boost its balance-sheet, injecting money into the economy and stimulating activity.