The President of the European Central Bank (ECB), Mario Draghi resisted market pressure to announce already now an extension of the debt program (ending in March). The Governing Council decided, yes, some teams take charge of the central bank to analyze possible measures that can ensure that the program continues to function normally. Recognizing, however, the limits of monetary policy, Draghi repeated his call that the countries that have room for maneuver in terms of budget and current account should use it. “ Germany has leeway” , threw the head.
The trade surplus of Germany has been near record, which is a violation of Brussels recommendations. Since 2013 the Commission requires to Berlin a decrease in the German surplus. In this context, Mario Draghi showed on Thursday, after the meeting of the Governing Council, it is expected that inflation will accelerate slightly in the coming months (compared to 0.2% now) but did not hide that politics economic (at national and European levels) should have a help to stimulate domestic demand where there is scope for this to be done. Still, Draghi confessed he feels “confused by some things you say sometimes.”
You can not press a button and the current account surplus disappears. That’s not how things work. “
In other words,” we are not talking of planned economies. If an economy is naturally competitive, the only thing what you can do is to have economic policies that take advantage of that surplus and turn it into domestic demand. ” Still, Draghi does not disagree that “countries that have fiscal space, they should use it.” On the other hand, “those who do not, should have a lot of attention to the composition of policies” , which is as or more important than the volume [of fiscal stimulus], according to Draghi.
at a press conference, as expected, with little history, Mario Draghi announced avoided, for now, a strengthening of stimulus – either in time or in the type of policies. But made it clear that the program of buying assets will remain “until discernable an upward inflation trend” closer to the objective of close to 2% .
interest rates, these, will continue at low levels “far beyond our horizon of monetary policy”, which indicates that interest rates in the euro zone will not rise significantly in the coming years. Good news for those who have credit, bad news for those who have savings
And bad news, too, for the European financial sector. – Where have been much criticism of ECB policy especially the rate of deposits in negative territory (-0.4%). One of the banks that has most criticized Mario Draghi is the German Deutsche Bank and its chief executive John Cryan. “ does not seem fair to say that the problems of banks are limited to interest rates” , shot Mario Draghi.
“We have to have patience, the rates have to go low to stimulate economic recovery, “he added, noting that the banks also have high earnings in recent years with the sale of public debt at higher prices than would exist if the ECB were not in the market to buy.
the the economy, the ECB remains concerned about “downside risks” that prevail in their projections. That is why the ECB, although they have sat on their hands this September, is ready to take more stimulus measures . “At this point, the changes [in economic estimates] are not significant enough to lead to a change in our policies,” Draghi said. “But there is no doubt about our will and of our ability” to do more, said the ECB president.
For now, the ball is on the side of “committees” of the ECB will examine ways to ensure that the program of buying debt securities does not touch the shortage of instruments that can buy. Portugal is one of the countries that may suffer if there are no changes in the stimulus program methodology.