Tags: Roubini | Europe | Double-Dip | Recession

Roubini: Europe is Headed for a Double-Dip Recession

Friday, 06 May 2011 10:03 AM

The European Central Bank will toss periphery nations back into a recession if it keeps raising interest rates, says New York University economist Nouriel Roubini.

Greece, Spain, Ireland, Portugal and Italy are already battling weak economic activity, and higher interest rates are only going to make things worse by strengthening the euro.

"Unfortunately the ECB has started to increase interest rates, these increasing interest rates are leading to a strengthening of the euro," Roubini says, according to the BBC.

roubinin200.jpg
Nouriel Roubini
(Getty Images photo)
"The euro becoming stronger and stronger is preventing the resumption of economic growth."

Peripheral eurozone economies are laden with too much debt, and lower interest rates would help them better recover.

Those embattled countries got a break recently when the European Central Bank voted to leave interest rates unchanged at 1.25 percent.

European Central Bank head Jean-Claude Trichet did say the bank would "monitor very closely" all risks to inflation, which leaves market watchers expecting rates to say put in June although they'll likely rise again in July.

"We believe that the ECB will be wary about raising interest rates aggressively due to the growth headwinds facing the eurozone and the problems higher interest rates will cause for Greece, Ireland, Portugal and Spain," says Howard Archer of IHS Global Insight, according to the Associated Press.

Trichet has said monetary policy authorities will move rates higher to fight inflation, which is running above the bank's goal of just under 2 percent.

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The European Central Bank will toss periphery nations back into a recession if it keeps raising interest rates, says New York University economist Nouriel Roubini. Greece, Spain, Ireland, Portugal and Italy are already battling weak economic activity, and higher interest...
Roubini,Europe,Double-Dip,Recession
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2011-03-06
Friday, 06 May 2011 10:03 AM
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