ECB Officials to Debate on Stimulus Expansion in the Light of Cheaper Oil
Mario Draghi, president of the European Central Bank and his colleagues will now be debating on the issue whether the availability of cheaper energy can be counted as a blessing or a curse.
This week, as the European Central Bank president will convenes his Governing Council, the twenty four policy makers have a task in hand and have to review how the fall in oil prices will affect the inflation outlook in the euro area. They also have to chalk out ways to handle the situation.
The biggest drop of crude oil prices seen in three years followed the decision of the OPEC members to continue with their regular oil production targets as they could not agree on a production cut that would have limited supply and stabilised the prices. This increasing oil availability is also putting a downhill pressure on prices of consumer products which is already nearing stagnation.
Jens Weidmann, a German council member hinted at how oil prices is at present a crucial point in the debate of quantitative-easing, when last week he mentioned that the fall in the energy sector is like a small stimulus package. His words suggested that there will be no immediate need for the ECB to increase its existing measures further.
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