According to Robin Brooks, Chief Economist at the Institute of International Finance (IIF), the euro could become a deflation currency like the Japanese yen was before the Bank of Japan, under Kuroda’s leadership, launched unprecedented monetary stimulus in 2013.
While the common currency is strong in trade-weighted terms, it remains weak in real or inflation-adjusted terms. “That is not the equilibrium you want,” Brooks tweeted Tuesday.
As represented by the consumer price index, the cost of living in the common currency area fell into the negative territory in September. The negative inflation has triggered speculation that the European Central Bank would provide additional stimulus before the end of the year.
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