ECB's Policy Announcement May Lead to Tensions in the Eurozone

ECB's Policy Announcement May Lead to Tensions in the Eurozone

For the European economies this year has not been very rosy. With Italy moving back to a recession and the contraction of German in the second quarter things do not appear to be much better in the following quarter too.

Reportedly Wolfgang Schaeuble the German finance minister on Thursday said that the strongest economy of the Eurozone will most probably miss its estimated 1.8 percent growth mark in the current year.

However these weak figures have not been too detrimental for global risk assets. These have evidently amplified the appetite of the European Central Bank to encourage the economy.

The announcement made by ECB on Thursday that said that it would trim down on rates and initiate asset purchases. The problem for Europe does not seem to be just economical anymore and there may be some political issues rising too with the latest decision that came from ECB.

On Thursday, ECB president Mario Draghi said that few countries did not agree with the action taken by ECB and it has been reported that Jens Weidmann the president of German Bundesbank voted against the actions of both the rate cut and the asset purchases.

In case the tensions between ECB and Germany continue and the condition of the feeble Eurozone economies deteriorate then doubts regarding the breakup of EU may again return.