THE euro area is mired in recession and unemployment in the single-currency zone continues to scale new heights, reaching 11.8% on figures out this week, up from 10.6% a year earlier. But the European Central Bank did nothing to help today, leaving its key interest rates unchanged. The governing council took the decision unanimously, ECB president Mario Draghi told the press conference.
The lack of action amid so much economic misery may seem surprising, but the ECB is sticking to the judgment it reached in December when it stayed its hand even though the staff forecast painted a much grislier picture for eurowide GDP in 2013 (a contraction of 0.3%) than in its previous projection last September (a rise of 0.5%). The council believes that the economy is lagging behind the improvement in financial conditions brought about largely by its own policies.
Choosen excerpts by Job Market Monitor from
via The ECB’s meeting: Mario’s waiting game | The Economist.
.
ECB rules out stimulus despite record jobless and fiscal squeeze
Mario Draghi, the ECB’s president, said the financial landscape has been transformed, citing a sharp drop in bond yields across the EMU periphery, a stock market rally and recovery of bank deposits in Greece and Spain. Capital flight has begun to reverse.
He even spoke of “exuberance” creeping into pockets of the credit system, with leveraged buy-outs and private equity deals becoming frothy – the first warning by the ECB of an incipient bubble as the fresh cycle gathers momentum.
The euro surged more than two cents to $1.32 against the dollar after he revealed that the ECB’s governing council had agreed “unanimously” to hold interest rates at 0.75pc, implying that “doves” who called for rate cuts last month have been silenced by a clutch of rising confidence indicators.
However, the ECB is gambling that the rosier mood will be enough to lift the real economy out of a deep slump during another year of fiscal contraction, with the sharp squeeze spreading from Italy and Spain to France.
Choosen excerpts by Job Market Monitor from
via ECB rules out stimulus despite record jobless and fiscal squeeze – Telegraph.
.
Related posts
EU | Invest for a job-rich recovery in Europe says László Andor European Commissioner responsible for Employment
The macro-economic situation in Europe continues to be extremely challenging. A number of Member States are in a double-dip recession and labour markets are in a crisis not seen in the EU for at least two decades. What is more, the outlook is not getting better. The European Commission’s Autumn forecast, presented on Wednesday, projects … Continue reading »
European Trade Union Confederation to European Commission – End collective austerity
On the eve of the European Commission’s major employment policy conference Jobs for Europe the European Trade Union Confederation (ETUC) appeals to European policy makers to face up to the failure of austerity and adopt an alternative approach. As politicians, EU and international officials, academics, experts and the social partners gather to discuss how to … Continue reading»
Job Gap – Employment Policy – It is the right time
Faced with a jobs crisis, policymakers the world over are digging deep into their policy toolkits to generate more employment. A recent study by the IMF’s Fiscal Affairs Department argues that reforms of tax and expenditure policies offer great promise in helping countries confront the jobs crisis, including in the short term. The study argues … Continue reading »
EU calls for youth guarantee schemes
EU member states should guarantee that young Europeans do not remain out of work or education for more than four months, according to a scheme unveiled Wednesday by the European Commission. However the cost of tackling youth unemployment would largely fall to the states, said EU Employment Commissioner Laszlo Andor, adding that “the costs of … Continue reading »
Youth Transitions / A function of how economic, education and employment policies interact
“Youth unemployment was rising since well before the current economic downturn, but the fallout from the financial crisis has brought it to the top of the government’s agenda and generated a plethora of publications and initiatives to tackle the problem.” write Tess Lanning and Katerina Rudiger in Youth unemployment in Europe: lessons for the UK (Adapted choosen excerpts by …Continue reading »
Job Market Monitor 
Discussion
No comments yet.