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News Summary: ECB now faces falling inflation

Created: 11/01/2013 2:35 PM

MORE WORRIES: The European Central Bank has a new headache: an unexpected drop in inflation. The recent slide is another sign of how weak the economic recovery is in the 17 countries that use the euro.

DETAILS: An official report this week showed the inflation rate fell to 0.7 percent in September from 1.1 percent the month before. The ECB’s stated goal is for inflation of close to but below 2 percent.

THE PROBLEM: The drop in inflation shows people aren’t able or willing to risk spending or borrowing. Sellers can’t raise prices as much. But the ECB has already used up most of its traditional medicine: lower interest rates. Its benchmark rate is at a slim 0.5 percent.

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