Article RAAW The City is cheering on Mario Draghi, but his QE weapon lacks firepower

The City is cheering on Mario Draghi, but his QE weapon lacks firepower

by
Phillip Inman Economics correspondent
from on (#RAAW)

The European Central Bank boss is deliberating the launch of another round of quantitative easing, but other factors could lessen its effectiveness

There is a strong argument for Mario Draghi to sit on his hands and do nothing. The boss of the European Central Bank (ECB) may have failed earlier this year to slay the dragon of deflation when he launched a60bn (43bn) a month of quantitative easing, but his policy worked to some degree and in any case, his weapons are ineffectual for now .

The City loves cheap credit and is cheering on Draghi to cut interest rates or boost the QE programme, based on the time-honoured theory that central bankers with loose monetary policies can prevent their economies slipping into negative inflation.

Related: Mario Draghi: ECB prepared to cut interest rates and expand QE

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