ECB steadily continues monetary easing policy as EU economy gains momentum

Mario Draghi

European Central Bank – Press Conference Vítor Constâncio, Vice-President of the ECB, Mario Draghi President of ECB and Christine Graeff, Director General Communications (from left to right). Location: Frankfurt . Date: 09/03/2017 © ECB, 2017 / Source: ECB – Audiovisual Service

It was last Thursday when the president of the European Central Bank gave a speech on ECB’s monetary policy and EU economic recovery at the ECB and Its Watchers XVIII Conference in Frankfurt. Mario Draghi’s opinion is that the ECB’s policy is working and monetary easing should be continued as inflation rates highly depend on it.

However, the Germans couldn’t let this unanswered with Jens Weidmann, president of Bundesbank, to support for a less stimulus policy given the fact that economy is improving.

Inflation target still not reached

The ECB is continuing its monetary policy, at least till the end of the year, since inflation rate has not yet stabilized to the central bank’s target of below but close to 2%. Thus far, inflation reached a remarkable 2% on February, the highest annual rate since January 2013, but slowed down to 1.5% last month. Those figures could be encouraging for ECB if there were not plasmatic as are driven mainly by food and energy price inflation with core inflation to be at 0.9%.

More specifically, Mario Draghi stated during the conference on the issue:  “We are not yet at a stage when inflation dynamics can be self-sustaining without monetary policy support. The recovery of inflation still depends on the very favourable financing conditions that firms and households enjoy, which in turn depends on the substantial degree of monetary policy accommodation we have in place today.”

Germany responds

The stance of Germany has been always opposite to the ECB’s loose monetary policy. This time, the president of the German central bank mentioned at a banking conference in Berlin that the ECB should be implementing a less stimulus policy as it is more harmful for the EU economy. Besides, it is known that Germany does not favor negative interest rates and expansionary monetary programmes as it is the largest saver of the Eurozone.

Is the EU economy recovering?

Mario Draghi stated that the EU economy has been recovering but there are still uncertainties which can have negative consequences to the bloc. Furthermore, the ECB‘s president believes this monetary policy is one of the key factors which support the economic recovery. More in detail, Mario Draghi said last week: “We are confident that our policy is working and that the outlook for the economy is gradually improving. There are indeed three features of the recovery which give us confidence that it may be gaining its own momentum, although – given the severity of the slump we are emerging from – monetary policy still remains critical to facilitate the transition”.

The European Commission released the Winter Economic Forecast 2017 report on February. The EU economy is expected to grow at a pace of 1.8% in 2017 and in 2018. Moreover, the unemployment rate in the region is forecasted to fall from 8.5% in 2016 to 8.1% this year and to 7.8% in 2018. Even if these are the lowest unemployment figures since 2009, they remain above pre-crisis levels according to the report. In general, the Commission predicts that all EU countries will expand economically during 2016 and 2018.

EU faces great challenges

However, the EU risks from high political and economic uncertainties starting from the general elections taking place in France and Germany this year to Brexit and migration crisis. All the above are about to have a direct impact on the EU economy together with the fact that the reduction of unemployment rates is not adequately increasing wages and prices. Therefore, ECB should not only target on how to reach the desirable inflation rate but also make sure that it is not at the entire cost of the EU economic growth.

All in all, the economic figures reveal that ECB‘s intervention via stimulus monetary policy is still needed to make sure that the EU keeps on recovering. It is imperative that the EU economy becomes more resilient to economic shocks in order to ensure that future financial crises are avoided.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Is it true that the G20 wants to arrest tax evasion of multinationals?

After the European Parliament elections – what happens next?

New study shows close link between GVCs participation and economic development

Commission presents EU-Vietnam trade and investment agreements for signature and conclusion

“They are trying to make improvements, but of course they are quite slow for my generation”, Vice President of JADE Victor Soto on another Sting Exclusive

My unlimited China

Future of Insurance Claims in Focus at Fourth Annual Connected Claims Europe Summit

My experience living with depression and schizophrenia in Thailand

Brexit: the time has come for the UK to clarify its position

Libya: UN Mission condemns deadly attack against police in country’s south-east

Parliament votes reform for better European Co2 market but critics want it sooner than later

EU Trust Fund for Africa: new migration-related actions to protect vulnerable people and foster resilience of host communities in North of Africa

Indian cities are running out of water

Why the foundations of the modern world are costing the earth

Climate change is a security threat. We must act now

Guterres censures terrorist attacks in Nigeria, pledges UN ‘solidarity’

These are the world’s best cities to be a cyclist

The West castigates Turkey’s Erdogan for the ruthless political cleansing

This app uses augmented reality to rewrite ‘herstory’

‘At risk’ Mediterranean forests make ‘vital contributions’ to development

Auditors say EU spending delivers limited value for money but the timing of their report poses questions

EU adopts retaliative measures in response to US steel and aluminum tariffs

Pride in practice: Equality in access to health services for the LGBT community in a third-world country

Italy can stand the US rating agencies’ meaningless degrading

Draghi tells the EU Parliament his relaxed policies are here to stay

Six steps that can help us to tackle homelessness

Will CETA be implemented after eight long years or it will be vetoed by the EU citizen?

European Citizens’ Initiative: Commission registers ‘End the Cage Age’ initiative

Chart of the day: This is how many animals we eat each year

Why the ECB prepares to flood the markets with more and free of charge euro; everybody needs that now

India-UN fund gets 22 development projects off the ground in first year

The COP22 is under full deployment while Donald Trump threatens openly to withdraw the US from the Paris agreement

Parliament supports plans to improve quality of tap water and cut plastic litter

The Japanese idea of ‘chowa’ – and how Asia can thrive in the future

“We are in Europe, but not of it”, from Churchill to Cameron: British Exceptionalism now threatens the entire EU Edifice

Infinite Oath

UN chief calls for ‘immediate end’ to escalation of fighting in southwestern Syria, as thousands are displaced

Investing in working conditions and quality jobs

“Sorry mom it’s not our day”: the true refugee story of a young doctor and his family forced to flee their home

‘Many challenges to overcome’ at UN, in fight against abuse: victims’ advocate

Will France vote for more or less Europe in the next presidential elections?

EU and China seize momentum to enhance trade agreements in response to Trump’s administration

Spending another 3 billion euros on Turkey feels better than admitting EU’s failure

The next Google in biotech: will it be Chinese?

How well you age depends on what you think of old age

Macron’s Presidency: what the young generation’s expectations are

These Indian fishermen take plastic out of the sea and use it to build roads

Ebola situation worsening in DR Congo, amidst growing ‘funding gap’ UN health agency warns

Monday’s Daily Brief: the cost of maternal healthcare, Sudan and Chad updates, sustainability in focus

ECB: A revolutionary idea to revitalize the European economy with cheap loans to SMEs

UN official sees ‘unprecedented opportunities’ to make progress on peace in Afghanistan

Top envoy to Yemen praises ‘flexibility’ of chief negotiators as new UN mission chief is named

These are the world’s 20 most dynamic cities

The 2019 European elections: A pro-European – and young – electorate with clear expectations

MEPs propose measures to combat mobbing and sexual harassment

Africa must become more resilient to climate risk. Here’s how

Confirmed ‘Blue Line’ tunnels ‘do not appear’ to surface in Israel – UN peacekeeping chief

UN Human Rights chief urges Venezuela to halt grave rights violations

International Court of Justice orders Pakistan to review death penalty for Indian accused of spying

On technology and medical ethics

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s