Introduction York Times. It is written article by

Introduction

The
Article “As European Central Bank Eases Emergency Measures,
Risks May Lurk” was published in October 25, 2017 by New York Times.
It is written article by Jack Ewing about monetary policy which is described by
the policy adapted by European Central Bank. It mainly emphasize on dismantling
an arsenal of emergency measures that for a decade helped to keep the currency
and economy from disintegrating in the face of financial turmoil. But the
central bank also left itself plenty of room to reverse course if necessary – tacit
acknowledgment that it is voyaging across unmapped terrain in a still
vulnerable economy.

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Reaction

The decision marks a new phase of the recovery, after four
years of economic expansion and falling unemployment. Mario Draghi, the central
bank’s president, heralded what he called “the unabated growth momentum” in the
19-country euro area. Still, the central bank is being cautious, so thoroughly
telegraphing the plan that it caused barely a stir in financial markets. The
approach reflects the extraordinary level of stimulus that the central bank has
been providing since before the global financial crisis even started. I believe
European central is working hard without no worry to reflect the demand of
market. It is completely focused and cautious to ease the demand of public
through it. I believe European Central Bank can ease the problems that can
arise in future relative to money.

 

How it Relate to Class?

This article states many things about Federal
Reserve and Central bank which directly indicates us to be focused on money and
the monetary policy. The European Central Bank’s
move followed similar actions by the Federal Reserve and other central banks,
as they gradually reduce their stimulus efforts. The Bank of England is
expected to raise rates for the first time in 10 years. The Fed has said it plans
to keep increasing rates. This relates us about the impact of increase in
interest rate and how it will hamper the market. If the interest rate is
increased for saving accounts then it will surely benefits the public, but if
it is for loan amount then the debt will decrease due to the high rate and
financial market will have some impacts afterwards. Britain left the European
Union which put the danger of increasing inflation.

Claims

Article
focuses on monetary policy by European Central Bank. It claims “The longer this
expansive monetary policy lasts, the greater the chance of overvaluations, and
the risk that there could be intense price corrections”. This is the difficulty
the central bank faces. No one knows for sure what unpleasant surprises may
lurk now that it is ready to begin the so-called tapering, stanching the flow
of easy money that made it possible for banks to lend and governments to
borrow. So, articles claims the longer expansive monetary policy lasts, there
is the greater chance of overvaluations and also many risk. It could lead us to
price correction in market. It seems change in the policy is required and it
seems legit to me as well. I believe, such policy will act as lurking variable
to decrease the price value in market. It makes possible for government to
borrow money and banks to lend money to others. It also states due to it, real
states price increased rapidly in many European cities and it is really hard
for the economic growth. Consumers, businesses and politicians have also gotten
accustomed to — or spoiled by — low interest rates. Investors are so desperate
for safe places to put their money that corporations like Daimler, the German
automotive giant, have been able to issue bonds that pay no interest. Low rates
have also weakened the euro against other currencies, a boon for exporters
whose products are usually cheaper for foreign customers as a result. The euro
will most likely rise as monetary policy returns to normal, making it harder
for some businesses to compete.

 

Weakness and Strength

The
strength of this article, it is well written and understandable due to its
simplicity in words selection. It has properly supplied reasonable claims
sticking to the topic with valid reasons and claims. On the other hand, I think
some reason are not much valid to the claims made in the articles. It’s says, some economists fear
that the end of nearly free money will come as a shock for some. But I think this is not what will happen at any point
and for me it’s not much reliable. If
it had included easier way of data presentation with proper graphs then it
would be much easier to critically analyze the article.

 

 

Conclusion

The
article mainly gives importance to European Central Bank Monetary Policy and
its fundamental aspects regarding the money. It also emphasizes on impacts of
European Central Bank monetary policy in Europe and also real estates in
popular European cities. This article helps us to be clear about monetary
policy based On Fed.

 

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