VIENNA Jan 22 The European Central Bank should
be ready to take measures including quantitative easing to ward
off the danger of deflation in Europe, the OECD's chief
"There is a deflation risk, but I don't know how large it
is," Pier Carlo Padoan of the Organisation for Economic
Co-operation and Development told Austria's Der Standard
newspaper in an interview published on Wednesday.
The International Monetary Fund also warned of deflation
risks in an update to its World Economic Report on Monday,
saying its models showed a 10 to 20 percent chance that prices
could start to fall in the euro currency bloc.
Inflation in the euro zone was just 0.8 percent year-on-year
in December, well below the ECB's target of close to but below 2
Padoan said the ECB should be prepared to cut deposit rates
below zero, and added: "New measures should also be taken. These
include a European form of quantitative easing. By this I mean
massive interventions on secondary markets."
"One could also consider an extension of (the bank's)
mandate to intervene in primary markets, like the Fed and other
central banks are doing."