Rate Cut Makes Draghi a Good German
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Nov. 14 (Bloomberg) -- The European Central Bank’s decisionlast week to guard against deflation by cutting rates was in thecollective interests of the euro area. That includes Germany,whose board members opposed the move and where the news mediahas excoriated ECB President Mario Draghi for it.
Deflation should be thought of as the economic equivalentof cancer: In both cases the effects can be extreme and an ounceof prevention is worth a pound of cure. Just ask the Japanese.Markets were surprised by the Nov. 7 move only because theydidn’t expect the ECB to act before it published its nextinflation projections, in December.