Tags: Treasury | ECB | economy | stimulus

US Warns ECB Actions May Not Be Enough to Save Europe

Friday, 06 Feb 2015 04:55 PM

The United States urged European governments to spend more money to boost their depressed economies, warning that a reliance on central bank money-printing might not be enough to restore healthy growth.

Speaking ahead of next week's meeting in Istanbul of top economic policymakers from the Group of 20, a senior U.S. Treasury official said global economic growth was looking weak, hurt by Europe's persistent sluggishness as well as by a slowdown in China and recent drops in Japanese output.

The official, who asked not to be named, put particular emphasis on Europe's travails which last month led the European Central Bank to announce a bond-buying program.

"The ECB has taken forceful steps," the official told reporters. "That alone has not proven sufficient to restore healthy growth."

He said the new monetary stimulus should help reduce the risk that the economy falls into deflation, a debilitating downward spiral of falling prices and wages. But at the same time, a number of countries are being dragged toward deflation because their economies are so weak and already hit by falling wages.

"As to how those two factors balance out we'll have to see," he said.

In a veiled stab at Germany, he said countries in Europe with fiscal space and external surpluses should pursue "bolder policies" to boost their domestic economies, including infrastructure spending.

Germany rebuffs America's assertions by saying it has to be fiscally prudent in part because of its aging population.

The official said it was also important countries enact structural economic reforms. He said this applied to Greece, as it did to Japan where the United States also thinks policymakers should reinvigorate fiscal and monetary stimulus as well.

© 2017 Thomson/Reuters. All rights reserved.

 
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Economy
The United States urged European governments to spend more money to boost their depressed economies, warning that a reliance on central bank money-printing might not be enough to restore healthy growth.
Treasury, ECB, economy, stimulus
278
2015-55-06
Friday, 06 Feb 2015 04:55 PM
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