Draghi Europe Scenario Points to Lowflation Still Painful
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For all the fears of a Japan-style era of deflation, a more likely threat for Europe is what International Monetary Fund officials are calling lowflation.
A sustained period of ultra-low, albeit rising, inflation still has the potential to destroy output, hurt hiring and revive memories of the recent fiscal crisis by hammering the ability of governments to repay debts. With data yesterday showing inflation about a quarter of the European Central Bank’s goal of just below 2 percent, President Mario Draghi is under pressure to respond.