ECB Sees No Signs of Deflation, Recession in Eurozone

ECB Sees No Signs of Deflation, Recession in Eurozone

The European Central Bank sees no signs of deflation or recession in the single currency area, but will remain vigilant, its chief economist said in a newspaper interview on Tuesday.

Asked whether the 18 countries which share the euro are on the verge of a new recession, Praet replied: “No, I wouldn’t say that.”

Similarly, the risk of deflation — a disastrous downward spiral of falling prices — was “limited,” Praet said.

The ECB has cut interest rates to all-time lows and drawn up programmes to pump cash into the economy, but is prepared to take further action if necessary, Praet said.

On Sunday, the ECB published the results of its year-long audit of eurozone banks, giving the large majority of them a clean bill of health.

The central bank hopes that the success of the exercise will provide a boost to lending in the euro area.

On its own, the audit “is not sufficient to restore credit provision, but it is a minimum condition,” Praet said.


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