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

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

European Youth Event 2016 – bridge between youth and policy makers

Why home is the least safe place to be a woman

CHALLENGING THE ZEITGEIST OF DIGITAL – Change making projects innovate mobile support for refugees, inclusive environments, early breast cancer detection and more

A Sting Exclusive: “Our ambition is by 2020 Indonesia to become an emerging power of World’s Maritime Access”, reveals the Chargé d’Affaires at the Embassy of Indonesia in Brussels, treating WEF, ASEAN and EU-Indonesia relations on the eve of the World Economic Forum East Asia 2015 in Jakarta

Doctors vs. Industry 4.0: who will win?

Tools of asset development: Renewable Energy Projects case

Uncovered liabilities of €5 billion may render EU insolvent

UN chief hails Libyan leaders’ agreement to hold general election

A lack of affordable homes is forcing young Britons to live with their parents

Ukraine pays the price for lying between Russia and the EU

The refugee crisis brings to light EU’s most horrible flaws and nightmares

Digital IDs and the Digital Economy: the (still) missing link?

The EU accuses Russia of bullying Ukraine to change sides

Youth Guarantee putting young people in jobs

A jingoistic Spanish ‘war’ from the past

Consultant in Forensic Technology – 1969

Release of prize-winning Reuters journalists in Myanmar welcomed by UN

How fintech is setting Southeast Asia’s SMEs free

A day in the life of a refugee: We should be someone who helps

Report on EU trade defence – effective protection against unfair trade

This is how people in Europe are helping lead the energy charge

The reason the world showed limited empathy to the Orlando victims

The ECB ‘accidentally’ followed IMF‘s policy advice for growth and job creation by printing more money

FROM THE FIELD: Free tutorials in Mali, ‘a life-saver’ for Fatouma

Draghi: A bridge from Brussels to Berlin

104 countries have laws that prevent women from working in some jobs

Global warming: our responsibility

The US repelled EU proposals on common rules for banks

MWC 2016 LIVE: Telenor CEO calls on operators to embrace Mobile Connect initiative

Pollution could be harming every part of your body. Here’s how

How will Brexit affect higher education in the EU?

Afghanistan: top UN official denounces ‘extreme’ suffering of civilians in Ghazni

Forty-two countries adopt new OECD Principles on Artificial Intelligence

‘Bring to life’ precious moments caught on film or tape, UN agency urges on World Day

Cameron readies to support ‘yes’ for Britain in the EU

We need a global convention to end workplace sexual harassment

The West unites against Mali desert rebels

Why are the Balkans’ political leaders meeting in Geneva this week?

These are the best cities for tech

Have central banks missed the exit train?

‘Countless opportunities’ for new people-centred workplace, but ‘decisive action’ critical

Canada needs to increase foreign aid flows in line with its renewed engagement

EU-US trade deal: Europe to Americanize its social model?

Technological innovation can bolster trust and security at international borders. Here’s how

Electronic or conventional cigarettes – which is safer?

G20 World Exclusive Interview: “The world, especially emerging economies and developing countries, require a more sustainable and quality development”, the Spokesperson of Japan underscores live from Antalya Turkey

UN agencies call for action to bolster rights of Europe’s stateless children

Falsified medicines: new rules to enhance patients’ safety

Gains by Abyei interim force can help advance resolution of border issues between Sudan and South Sudan, UN peacekeeping chief says

EU’s guidelines on net neutrality see the light although grey areas do remain

Somalis ‘will not be deterred’ by Friday’s terror attacks – UN chief

Benefits of rural migration effect often overlooked, new UN report suggests

Facebook and Google to treat Europe as the 51st State of the USA

This is what great leadership looks like in the digital age

MEPs adopted measures to reconcile work and family life

EU to gain the most from the agreement with Iran

On flight to sustainable development, ‘leave no country behind’, urges aviation agency

Parmesan cheese on shelves in Italy (Copyright: European Union, 2014 / Source: EC - Audiovisual Service / Photo: Daniela Giusti)

CETA at risk again: Italy says it won’t ratify EU-Canada trade deal over product protection fears

YouTube stars get creative at UN, to promote tolerance

Women must be at ‘centre of peacekeeping decision-making’, UN chief tells Security Council

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