ECB must distance itself from the one-size-fits-all mentality

Darren Sinden, market commentator for Admiral Markets, joined Zak Mir on the Tip TV Finance show to discuss the ECB meeting and the effectiveness of QE, shown by unemployment and the GDP growth of Spain versus Germany.

ECB meet on Thursday to discuss future strategy

Sinden began by noting that this week provides significant data in the forms of the ECB meeting and the non-farm payroll numbers in the US on Friday, with each being important as far as monetary policy concerns for their respective economies.

In terms of the ECB, Sinden highlighted the 6 months since the ECB used QE, with very few signs of success. He noted that the ECB may increase the amount it is spending or alternatively increase the speed at which its money is deployed to Europe. Sinden also commented how certain parts of Europe could do with a helping hand, while other economies are experiencing growth.

Unemployment remains high

Sinden noted how the level of unemployment in Europe remains very high, 10.9%, when compared with that of the US, 5.3%. He added that there has been no consistency with inflation due to continually falling import prices. To finish, Sinden noted some inflation would be a good thing, as it means excess demand in an economy, but to achieve this the ECB needs to distance itself from the one-size-fits-all mentality.

Spain up 8 consecutive quarters versus Germany’s pedestrian like growth

Sinden noted how Germany recovered quicker than many economies after the financial crash, and that it has already experienced its growth spurt. But now it is not providing the impetus which the ECB would have liked in terms of GDP growth. He finished by comparing the two economies, with Spain achieving 8 consecutive quarters of growth, whilst Germany experienced slower growth, and not without dips.