WASHINGTON/FRANKFURT (Reuters) – “Patient” monetary policy. “Muted” inflation. “Uncertainty” over global trade and government policies that may be undermining the economy.
Evidence of a world slipping back to an inflation-less, slow-growth norm – the outlook that prompted the U.S. Federal Reserve to halt its interest rate hikes in January – has now forced a broader pivot among major trading nations as governments from Beijing to Ottawa take stock of a decaying outlook.
In announcing a sharp downgrade of euro zone growth and a surprise move to loosen monetary policy, European Central Bank President Mario Draghi on Thursday coined what may be the motto of the times: “Continued weakness and pervasive uncertainty.”
Those five words sum up why the ECB pushed back consideration of any rate increase to next year and expanded lending to banks to stave off a credit crunch.
The action was a response to weak inflation and growth data.