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ECB urged to take ‘bold action’ over deflation risk

Economic and Monetary Affairs committee chairman Roberto Gualtieri says the European Central Bank is “running out of time” to take action against the risk of deflation in the eurozone.

Yesterday, the ECB announced its monetary policy would remain unchanged from June, with a negative interest rate for banks, a headline interest rate of 0.15 per cent and no quantitative easing.

Speaking yesterday ECB president Mario Draghi said: “We will maintain a high degree of monetary accommodation. Concerning our forward guidance, the key ECB interest rates will remain at present levels for an extended period of time in view of the current outlook for inflation.”

Gualtieri says with annual inflation in the eurozone at 0.4 per cent, the deflation risk “is higher than ever”.

He says current ECB policy is not sufficient and “bold action” is needed to boost growth in the eurozone.

“We are running out of time,” Gualtieri says. “The June decisions did help a little bit in view of the euro exchange rate, but the euro area clearly needs bolder action both as regards price stability and also in view of stimulating demand.

“We cannot afford to wait any longer when other monetary areas are seeing increases in growth and employment and are likely to stop monetary easing. We need action now, not within months”.

An Italian Socialist MEP, Gualtieri took over from Liberal Democrat MEP as the chair of Econ last month and leads the European Parliament’s response to economic legislation.

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