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Published byBora Turgay Bozgüney Modified over 5 years ago
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The European Central Bank and Its Monetary Policy
The European Central Bank’s [ECB’s] immediate reaction to the terror attack was to cut interest rates by 50 basis points. But since then it has held the reins short. The direct impact of terror on the European economies will be minimal. The indirect effect of America's recession will be modest. The more important--and unpredictable--factor is the effect of the terror on European confidence Available indices of sentiment and plans all suggest that Europe is already in or about to enter a recession. The ECB's decision-making problem is complicated by the fact that it receives data one to two months later than the Federal Reserve. This all but guarantees that it will be behind the curve.
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