ECB under pressure to act after Euro Zone GDP disappoints
Thursday 15 May 2014
The European Central Bank came under renewed pressure to ease monetary policy after the single currency bloc showed fresh signs of weakening growth.
The euro zone managed expansion of 0.2 per cent in the first three months of the year — just half the 0.4 per cent expected by economists.
Germany managed 0.8 per cent growth but even the region’s economic powerhouse could not make up for stagnation in France, a 1.4 per cent contraction in the Netherlands and a 0.1 per cent decline in Italy.
The poor growth comes as ECB president Mario Draghi also battles inflation well below the central bank’s 2 per cent target at 0.7 per cent.
Analysts said its main interest rate could be cut below 0.25 per cent, while banks could also be charged for holding deposits at the ECB.
ING bank’s Peter Vanden Houte said: “Today’s figure is a major disappointment, as it suggests the eurozone is still far away from ... the escape velocity required for a sustainable recovery. If anything, [it] should increase the pressure on the ECB to act next month.”
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