Russias food import ban has become a big problem for Europes farmers, and its central bank policymakers. From Polish apples to French pork and Greek peaches, exporters to Russia may either have to slash prices, or destroy their own produce. At the macroeconomic level, this threat of lower prices might not matter in normal times. But these are not normal times as far as inflation is concerned. Despite record low interest rates and money pumping policies, eurozone inflation is running at only 0.4% year-on-year, a number that is way below the ECBs close-to, but below 2% level and also entrenched in what the central bank considers the danger zone under 1%. This is before any major impact from the sanctions.
Posted on: Thu, 21 Aug 2014 12:12:23 +0000