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The European Central Bank Fires Back

The European Central Bank, or ECB, fired a huge bullet designed to combat deflation and keep the Euro zone from falling into recession. Lately, economic reports out of Europe have been ugly. Inflation is very low, economic growth is weak, and the unemployment rate remains staggeringly high in many Euro zone countries including Spain, Italy, and Greece.

The proposed remedy for this is a massive bond-buying program called Quantitative Easing. The U.S. central bank, the Federal Reserve, employed similar measures in its own efforts to bring the U.S. out of recession. The Fed has scaled back its QE program significantly in recent months, due to the ongoing economic recovery in the United States. But in Europe, no such recovery has been felt. Brian Blackstone at The Wall Street Journal wrote “The European Central Bank’s executive board proposed buying roughly €50 billion ($58 billion) a month in bonds for at least a year.”