The ECB “does not give up” to low inflation

draghi blackGovernment debt will increase to almost 160% of GDP in 2021.

The European Central Bank will have to relax its monetary policy again, possibly through further reductions in interest rates or the purchase of assets, if inflation in the eurozone is not directed towards its 2% target.

Draghi stressed that the ECB Governing Council will decide “in the coming weeks” if it takes such measures, although it has advanced at the outset that all available instruments will be studied. These include the “policy of more cuts in interest rates”, as well as “measures to contain external factors”.

“We are committed, and are not resigned to having a low rate of inflation forever or even for now,” Draghi said. “That aim is symmetric, which means that, if we are to deliver that value of inflation in the medium term, inflation has to be above that level at some time in the future.”

His speech in Sintra, marked by the twentieth anniversary of the euro, was full of references to what he called “flexibility” and “adaptation” of the ECB to face the challenges that have arisen especially in the last decade.

“The tools (used in the past) have proven to be effective,” said Draghi, who defined the European Central Bank’s performance as “patient, persistent and prudent”.

Despite not ruling out new actions of the agency, he also left a message to those responsible for fiscal policy, which “must play its part” for the economy to progress.


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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.