ECB Visco – Low inflation also due to economic slack and high unemployment

European Central Bank’s (ECB) Visco, while speaking in Frankfurt said that the risk of de-anchored inflation expectation has risen, but low inflation is also due to economic slack and high unemployment.

Key quotes

Cannot avoid intervening if others don't intervene

Current low rates reflect the slack in the economy; not a bizarre choice

Low nominal rates may hurt financial institutions but they are necessary

Risk that real rates will rise if inflation expectations fall

Growth and price stability are key to financial stability