The European Central Bank (ECB) failed to get inflation to its target as the eurozone slid into deflation for the first time in years amid coronavirus chaos.
RT’s Boom Bust discussed the situation with the founder and CEO of Optimas LLC, Octavio Marenzi. The analyst says that the ECB seems to have “thrown everything to market including the kitchen sink,” and it could face dim economic prospects unless people’s confidence returns.
“Yields on euro triple-A bonds are negative way out to 20 years, which seems an absurdity. It’s unclear what else they can do, they can buy more and more bad debt and junk bonds and things of that sort if they’d like to do that and try and drive interest rates down,” he said.
However, such policies have proven to be ineffective, Marenzi noted. The real issue is that “people feel uncertain, so they are hoarding cash,” keeping the demand for money up and “we’ll see more inflation pick up.”
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