If you've ever wanted to break bread with a Bavarian or wave to a
Walloon, this would be a good time to do it: The falling euro has made
Europe much more affordable. But if you're thinking of lending some loot
to Latvia, you may want to wait until the euro has stabilized.
Europe's economic growth is so sluggish that the Eurozone – the 18 nations that use the euro as currency – is on the brink of a recession, which would be the third since 2007. What's particularly worrisome is that the Eurozone is also flirting with deflation, a period of falling prices, much as the U.S. experienced in the Great Depression and, to a lesser extent, the Great Recession.
"The European Central Bank's mandate is to keep inflation close to, but slightly below, 2%," says Curt Hollingsworth, portfolio manager at Fidelity Investments. The ECB's estimate for inflation in 2014 is 0.6%, which is uncomfortably close to deflation.
To boost economic growth and avoid deflation, Mario Draghi, president of the European Central Bank, announced Thursday that the ECB would be lowering interest rates in the Eurozone. The ECB's main interest rate would fall to 0.05%, and the ECB would embark on a bond-buying program, similar to the Federal Reserve's quantitative easing in the U.S.
Read more: Send yourself to Europe, not your portfolio
Europe's economic growth is so sluggish that the Eurozone – the 18 nations that use the euro as currency – is on the brink of a recession, which would be the third since 2007. What's particularly worrisome is that the Eurozone is also flirting with deflation, a period of falling prices, much as the U.S. experienced in the Great Depression and, to a lesser extent, the Great Recession.
"The European Central Bank's mandate is to keep inflation close to, but slightly below, 2%," says Curt Hollingsworth, portfolio manager at Fidelity Investments. The ECB's estimate for inflation in 2014 is 0.6%, which is uncomfortably close to deflation.
To boost economic growth and avoid deflation, Mario Draghi, president of the European Central Bank, announced Thursday that the ECB would be lowering interest rates in the Eurozone. The ECB's main interest rate would fall to 0.05%, and the ECB would embark on a bond-buying program, similar to the Federal Reserve's quantitative easing in the U.S.
Read more: Send yourself to Europe, not your portfolio
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