In March, the European Central Bank embarked on a programme of so-called quantitative easing or QE, a massive 1.14-trillion-euro (1.3-trillion) sovereign bond purchase scheme aimed at bringing area-wide inflation back up to levels consistent with healthy economic growth. “Indeed the euro area is lagging behind the U.S”.
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“It was also felt that recently improved prospects for the negotiations of a third financial programme for Greece could be expected to contribute to a firming of confidence across the euro area”, it said.
Recent events securing Greece’s place in the eurozone have dampened the relevance of the ECB’s deliberations over Greece four weeks ago. A default on that payment would have raised pressure on the ECB to cut off funds to Greek banks, a scenario that could have pushed Greece out of the euro.
Rebounding from an early low of 0.7131 against the pound, the euro rose to a 2-day high of 0.7160.
Prime Minister and Syriza party leader Alexis Tsipras faced tough opposition in the parliament, but argued that the bailout deal and the overhaul the party is promising for it, are the best solution for the Eurozone and Greece.
In doing so, it has enriched Germany’s overall economy with lower costs, while helping to carry an increasing amount of Eurozone long-term debt, which makes the weaker Eurozone’s budget even more dependent on Germany’s largesse.
Policymakers expect Eurozone’s economic recovery to broaden further, but to remain moderate and gradual, and risks to the outlook were seen on the downside that included a larger-than-expected adverse impact from the financial developments in China, the minutes of the July rate-setting session of the European Central Bank revealed Thursday.
The dramatic move by the Chinese authorities to devalue the renminbi could delay an expected increase in US interest rates and also mean the ECB has to maintain a looser monetary policy for longer, according to an analysis by Bank of Ireland Global Markets.
Since the “European Community” membership comprises roughly 20% of the world’s gross domestic product of an excess of $60 trillion, the Eurozone members were expected to equalize the benefits of world trade, especially benefitting its competitiveness from the common currency. In July 2014 the rate was 0.4%.
The inflation data has been a cause for concern as the figures directly reflect consumer demand and have fallen well short of the ECB’s inflation target of just under two percent.
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Ireland’s rate matched the euro zone average at 0.2% – compared to a negative inflation figure of -0.3% past year.
