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In the eurozone, with inflation far below target and a recovery that looks very fragile, the European Central Bank seems in no hurry to provide further support. Yet in the UK, where inflation has been stubbornly above target and the economy and housing market are picking up steam, the Bank of England is talking loudly about the need to support the recovery by holding rates low possibly for years yet.
Eurozone inflation for September is estimated at just 1.1 per cent, a long way from the ECB's definition of price stability: inflation "below, but close to 2 per cent". Meanwhile, the recovery remains nascent; Spain and Italy, two of the big four economies, may only just be emerging from recession. That is in stark contrast to the UK, where growth has been far stronger than expected this year and inflation has been stubbornly above 2 per cent since December 2009.
For the moment, the ECB seems content just to talk, while the BOE has been more activist. But the economic divergence between the UK and the eurozone might yet force the ECB to become more activist—and the BOE to become less wedded to its aversion to hikes.
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ECB/Draghi: Introductory statement to the press conference (with Q&A)