The European Central Bank (ECB) is actively contemplating further monetary stimulus measures in response to ongoing concerns about low inflation across the Eurozone. Sources familiar with the matter indicate that policymakers are weighing various options to bolster economic growth and push inflation towards the ECB’s target of close to, but below, 2%.

Potential Stimulus Options

Several potential measures are under consideration:

• Expanding Quantitative Easing (QE): This could involve increasing the monthly amount of bond purchases or extending the duration of the program beyond its current end date.
• Cutting Interest Rates Further: The ECB could further reduce its deposit rate, which is already in negative territory, to encourage banks to lend more money.
• Tiered Deposit Rates: Implementing a system of tiered deposit rates could mitigate the impact of negative rates on banks’ profitability.

Inflation Concerns

Inflation in the Eurozone has remained stubbornly low despite previous stimulus efforts. The ECB is concerned that persistently low inflation could lead to deflation, which can have negative consequences for economic growth.

Governing Council Meeting

The ECB’s Governing Council is scheduled to meet in the coming weeks to discuss these issues and decide on the appropriate course of action. The decision will depend on the latest economic data and the Governing Council’s assessment of the risks to the Eurozone economy.

Expert Opinions

Economists are divided on whether further stimulus is necessary or effective. Some argue that it is essential to prevent deflation, while others worry about the potential side effects of prolonged monetary easing, such as asset bubbles and moral hazard.