The ECB is playing with fire

According to a research by Standard & Poor`s, about 500 million people in the world live in conditions of negative interest rates set by central banks. At the same time there is a threat of feedback loop: negative rates encourage excessive risk appetite, which is to meet from regulators require new measures of quantitative easing. This policy can be justified only in one case: if it leads to an acceleration of inflation and GDP. It is, though, not happening.
Curiously, the study of Standard & Poor`s was published on the same day as the July ECB meeting protocol in which the central bank left the door to expand stimulus package open. In their view, the sluggish dynamics of wages, low inflation expectations, Brexit and the deterioration of the health of banking institutions threaten to slowdown in GDP and consumer prices. It is possible, that in September, the regulator will have to scale up or renew the terms of QE, and possibly, to lower the rates.