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

Featured Stings

A new European banking space is born this year

COP21 Breaking News_12 December: Another sleepless night for the negotiators before Indaba meeting

Refugee crisis update: Commission still in panic while Turkey is to be added in the equation

Draghi’s ‘quasi’ announcement of a new era of more and cheaper money

When is Berlin telling the truth about the EU banking union?

Will ECB win against low inflation by not following Quantitave Easing?

Does the EU want GMOs and meat with hormones from the US?

European Union: More taxes out of less income

Is there a chance for the West to win the war on terror?

European Youth Forum welcomes establishment of new Youth Intergroup in the European Parliament

Press coverage of migration crisis in Europe: a call for collaborative action

Convincing the Germans to pay also for the unification of Eurozone

Scotland and First Minister Salmond enter the most challenging battlefield for independence: Europe

Refugee crisis update: Commission is struggling alone with little help from EU or G7 leaders

New skills needed for medical students in Industry 4.0

JADE May Meeting last call for participants – join us in Zagreb

Who really cares for the environment?

Yes, together we can make a change! YO!Fest and EYE 2016

“The winner is who can accelerate the transition to a new digital era”. The Sting reports live from EBS 2015: a Digital Europe 4.0

Eurozone: Retail sales betray economic frailty

Britain in and out of the EU

Does the Greek deal strengthen the Eurozone? Markets react cautiously

JADE visits Lithuanian Junior Initiatives

Greferendum: the biggest political gaffe in western modern history to tear Europe apart? #Grexit #Graccident

Why the ECB suddenly decided to flood banks with money?

European Sting Cookie Policy

JADE Spring Meeting 2015: a step forward for Youth Entrepreneurship

Draghi left alone with no hope of boosting EU growth as Merkel just focuses on next elections

More state aid to big firms, no special provisions for the SMEs

Germany and France only care about keeping their borrowing cheap

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

Youth unemployment: No light at the end of the tunnel

The EU slowly exits from “Excessive Deficit Procedure” and hopefully from ‘Excessive Austerity Procedure’ too

Access to ‘affordable’ medicines in India: challenges & solutions

Arlington, USA: kick-off of the fifth round of the EU-US boxing match

We are close yet so far…

Cloud computing under scrutiny in the EU?

YO!Fest back in Strasbourg for the 2nd edition of the European Youth Event – 20-21 May 2016

Neelie Kroes at the European Young Innovators Forum: Unconvention 2014

The 28 EU leaders show contempt for the European Elections results

Will Europe be a different place this Monday?

EU is now giving Google new monopolies to the detriment of European citizens and Internet companies

We’ll succeed together

Will Merkel ever steer the EU migration Titanic and restore her power in Germany?

SCADA Security Conference 2017 in Prague, Czech Republic

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

China’s stock markets show recovery signs while EU is closely watching in anticipation of the €10bn investment

IMF’s Lagarde indirectly cautioned Eurozone on deflation

Who is to lose from the 6-month extension of the EU economic sanctions against Russia?

Counting unemployment in the EU: The real rate comes to anything between 16.1% and 20.6%

G20 LIVE: G20 leaders reaffirm OECD’s role in ensuring strong, sustainable and inclusive growth

Maros Sefcovic Canete European Commission Energy

Better late than never? Commission runs now to fight energy dependency on Russia with the sustainable energy security package

US, Russia oblige each other in Syria and Ukraine selling off allies

The historic accomplishment of a seamless EU patent and intellectual property space

Greece did it again

The European Parliament wants to stay in one place

How to test if Kiev’s ‘Maidan’ was an authentic revolt or a well-planned operation

A Sting Exclusive: why the environment is important to your health, by UNEP’s Head for Europe

Tsipras imposes more austerity on insolvent Greece; plans to win new early election soon

The Europe we want: Just, Sustainable, Democratic and Inclusive

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 )

Twitter picture

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

Facebook photo

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

Google+ photo

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

Connecting to %s