The ECB may not want to raise rates but there's not much choice. They are stuck between a rock and a hard place. They didn't raise rates when times were good, a

The ECB may not want to raise rates but there's not much choice. They are stuck between a rock and a hard place. They didn't raise rates when times were good, and now they have no buffer and can't lower them. Raising rates now could cause an inflationary spiral. https://www.lynalden.com/ecb-trapped/ https://www.lynalden.com/ecb-trapped/ For decades, whenever economic growth was sluggish, central banks would reduce interest rates and encourage more credit growth (a.k.a. debt accumulation) which leads to spurts of economic growth. Whenever the economy was booming, they would increase interest rates and discourage credit growth, to try to cool things off. The problem is that this level of micromanagement, with an understanding that the core system would always be bailed out if need be, contributed to higher and higher debt levels relative to GDP, both in private and public realms, and lower and lower interest rates. During the past four decades, the increase in debt over time was always offset by reductions in interest rates, so that the cost of servicing that debt never really went up. Eventually, however, major central banks all reached zero or even slightly negative interest rates, and there wasn’t realistically any lower to go. Any further debt increases at that point would be hard to offset by lower interest rates. The cost of serving the debt relative to GDP and incomes would actually start to rise.