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.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

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

Sustainability reporting: five ways companies should prepare

The Cold War had an unintended side effect: It created a European wildlife paradise

Key elements of the EU-China Comprehensive Agreement on Investment

No more lead in PVC to protect public health, say MEPs

European Solidarity Corps: Commission opens new call for project proposals

4 ways to make your wardrobe more sustainable

Constant rise of COVID-19 in Brazil

MWC 2016 LIVE: Mobile World Congress shows off planes, trams and automobiles

What living abroad does to your self-awareness

This year’s Earth Hour is going digital due to the COVID-19 pandemic

‘Repeated attacks’ could close down key hospital in eastern Libya, says WHO

These social entrepreneurs are lighting up Africa

Questions & Answers on the coordination of measures restricting free movement in the European Union related to the coronavirus pandemic

Texting is a daily source of stress for 1/3 of people – are you one of them?

How to stay in shape and step up support for refugees

Who is first (and last) in the race to build a workforce fit for the future?

Civil Liberties Committee endorses EU Digital Covid Certificate

EU Ombudsman must continue push for more transparency in Council and Commission

Women outliving men ‘everywhere’, new UN health agency statistics report shows

Wednesday’s Daily Brief: mental health, conflict prevention, Ebola in Uganda, Sudan protests, child labour

Questions and answers on the EU’s Arctic Strategy

Taxes on polluting fuels are too low to encourage a shift to low-carbon alternatives

Europe plans to send satellites into space to monitor CO2 emissions

Ukraine pays the price for lying between Russia and the EU

4 steps for looking after our mental health during these unsettling times

The missiles fired against Damascus, Syria divided Europe deeply

More beehives and beekeepers thanks to EU support

Urban Waste Water: Commission decides to refer HUNGARY to the Court of Justice over waste water treatment

These are the world’s best business schools

The Internet of Bodies is here. This is how it could change our lives.

This 12-year-old built an underwater robot to fight plastic pollution

This man is sleeping out in the Davos cold to make a point about homelessness

May a parody constitute a copyright infringement? European Court of Justice to give the answer

Transition between education and employment: how the internship culture is threatening the foundations of our education

LIFE Programme: Member States to benefit from quarter of a billion euros of investments in environment, nature and climate action

Human rights breaches in Iran, Egypt and Tanzania

Why David Cameron’s large victory in UK elections will not pursue a ‘Brexit’

The five stages of the Chief Digital Officer – and why they often fail

UN Security Council urged to act against ‘worst-case scenario’ Syria’s war-battered Idlib

EU revengefully shows no mercy to Cameron by demanding a fast and sloppy Brexit now

Mali: ‘Dire’ humanitarian situation, ‘grave’ security concerns challenge fragile peace

Consumers are getting more complex. Brands need to keep up to survive

Moving from a promise made in Sweden towards hope for peace in Yemen

Antimicrobial resistance: how can an intersectoral approach between society and healthcare professionals be developed and applied?

European Commission: Does Apple, Starbucks and Fiat really pay their taxes?

Can I still send mail in the time of coronavirus?

Countries must make teaching profession more financially and intellectually attractive

LGBTQ+: The social evolution of a minority

A Sting Exclusive: “Climate change-the biggest global health threat of the 21st century, yet overlooked in climate negotiations?” IFMSA wonders from COP21 in Paris

What does the future hold for quantum computing? Experts explain

Does upgrading our minds mean losing the spark of genius?

‘Compelling case’ for urgency around global disarmament, UN-led forum told

Do doctors need to know their patients’ sexual orientation and gender identity?

Mental health In Times of a Pandemic: What can each Individual to lessen the Burden.

Statement by the European Parliament ahead of the 10 April Brexit Summit

Palestinian Bedouin community faces demolition after Israeli court ruling, warns UN rights office

Coronavirus: Commission Statement on consulting Member States on proposal to prolong and adjust State aid Temporary Framework

China’s New Normal and Its Relevance to the EU

European Commission adopts new tools for safe exchanges of personal data

For Youth Rights: steps forward for better protection.

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

%d bloggers like this: