Draghi Speech today live by ForexSQ.com experts, It’s not time to stop purchasing stimulus plan the European Central Bank president Mario Draghi said in his speech today.
Mario Draghi Speech Today
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European Central Bank President Mario Draghi said Monday it is too early to start winding down the bank’s bond purchases, brushing off fresh criticism of the program in Germany as inflation has picked up.
In a hearing at the European Parliament in Brussels, Mr. Draghi highlighted recent improvements in the eurozone’s €10 trillion ($10.8 trillion) economy, including declining unemployment. But he said policy makers wouldn’t overreact to a recent rise in inflation, which he attributed to higher energy prices.
“Support from our monetary policy measures is still needed,” Mr. Draghi said. “We need to be convinced that movements in headline inflation are sustained.”
The ECB decided in December to expand its so-called quantitative-easing programs by a half-trillion euros, through the end of this year. The move has triggered fresh criticism of the central bank in Germany, Europe’s largest economy, and sparked a rare public spat between senior German and U.S. officials.
In Germany, the recent rise in inflation has fueled criticism of the ECB’s low interest rates, which opponents have blamed for harming the region’s savers.
In the U.S.—where the Federal Reserve has started to raise interest rates—Peter Navarro, the head of President Donald Trump’s National Trade Council, last week told the Financial Times that Germany is benefiting from a “grossly undervalued” euro that gives the nation an unfair edge over its trading partners.
German Finance Minister Wolfgang Schäuble—who has sparred verbally with Mr. Draghi in the past—responded to the U.S. criticism, laying the blame for Germany’s giant trade surpluses at the ECB’s door.
“When ECB chief Mario Draghi embarked on the easy-money policies, I told him that he would drive up the German trade surplus,” Mr. Schäuble told a German newspaper over the weekend. “I don’t want to be criticized for the consequences of these policies.”
At Monday’s hearing, Mr. Draghi sought to diffuse the dispute. He argued that different central-bank policies reflected “diverse positions in the [economic] cycle” between the U.S. and the eurozone.
“We are not currency manipulators,” Mr. Draghi said. Germany’s trade surpluses, he said, reflect the nation’s strong productivity, not wage manipulation. He highlighted a recent U.S. Treasury Department report to Congress that absolved Germany of currency manipulation.
One European lawmaker said Monday that the ECB chief was a “favorite scapegoat for Mr. Schäuble.” A year ago, the German finance minister blamed Mr. Draghi for the rise of a populist political party, the Alternative for Germany, which has been critical of the ECB.
Mr. Draghi declined to respond directly to the finance minister’s criticism.
“It’s understandable that politicians, especially in times of elections, express views on monetary policy,” Mr. Draghi said. But also is understandable that central bankers “hear them, but don’t listen,” he said.
Pressed on when the ECB might start to wind down its bond purchases, Mr. Draghi said it would only consider doing so when inflation rises across the region in a durable way. The ECB might even step up its stimulus measures if economic conditions deteriorate, he said.
Some lawmakers had hoped for more clarity. “The question of how to deal with quantitative easing is the elephant in the room,” said Markus Ferber, a German lawmaker who is vice chairman of the European Parliament’s economic and monetary affairs committee. “I would definitely like the ECB’s president to address the issue rather sooner than later.”
Mr. Draghi faced a series of questions about the actions of the new Trump administration, including efforts last week to start scaling back Dodd-Frank financial regulations.
Such a move, Mr. Draghi warned, could set the stage for another financial crisis. “A combination of easy money and financial deregulation was exactly the ground upon which the financial crisis developed,” he said. “Frankly, I don’t see any reason to relax the present regulatory stance.”
Asked about a possible burst of protectionism, Mr. Draghi said the ECB was watching developments with concern.
“We’ll have to judge when we see put in place what is being announced,” he said.