ECB President Mario Draghi
The European Central Bank could soon start buying g overnment bonds. After presenting its President Mario Draghi is more required in the maintenance of price stability than they were six months ago. “The risk that we will not fulfill our mandate of price stability, at least higher than six months ago,” he told the “Handelsblatt”.
Therefore, the ECB was in “technical preparations to change the scope, pace and composition of our measures the start of 2015, this should be necessary to respond to a too long period to low inflation”. In it there is unanimity in the Governing Council. The purchase of government bonds is one of the tools that can make use of the ECB to fulfill its manda te. However, it should not come to state budgets.
The inflation rate was lying in July averaged 0.3 percent, Draghi said. The ECB is price stability ensures moves inflation just below two percent. The risk of deflation, or a decline in prices and wages, is “not entirely excluded, but it is limited,” Draghi said. If inflation but long remain too low could “put people to further reduced in price and easy to move their spending.” It was not ready yet. “But we have to go against this risk.”
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The ECB President called again structural reforms in Europe, especially flexible labor markets, less bureaucracy and lower taxes. Here you’ll be “clearly too slow” progress. All countries in the euro zone would have to do more, and Germany. The monetary policy of the ECB would be much more effective, governments would implement structural reforms.
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The “moderate recovery” in Europe go further, Draghi said. However, it is fragile and uneven. Nevertheless, he was confident that this year the economy will grow in all countries of the euro zone. For then he was cautiously optimistic. “We believe that the combination of expansionary monetary policy and government reforms will bring back much of the lost confidence.” Europe was in a rather lengthy period of weakness than in a crisis.
The euro zone will not break apart. “There is therefore no Plan B.” Draghi expressed understanding for concerns of savers who saw that the returns on their deposits shrank. The interest was for a long time “very, very low.” – And that would “pr obably a time to come”
politician he did not want, Draghi also said. In pointing out that his compatriot Giorgio Napolitano wants to resign shortly as president of Italy Draghi said his mandate as ECB chief would last until of 2019.
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