Mario Draghi urges governments to help fight deflation 

Mario Draghi is determined to tackle low inflation in the Eurozone, and has called upon governments to also play their part in the fight against possible deflation.

The president of the European Central Bank (ECB) today announced a new package of credit easing measures, including targeted long-term refinancing operations and a bond-buying programme.

He claimed the measures would allow the ECB to keep interest rates low.

Draghi later added that Europe could not achieve recovery unless politicians implement reforms to raise the “growth potential” of individual countries.

Speaking at the Brookings Institution in Washington, Draghi said the ECB governing council was “unanimous in its commitment to take additional unconventional measures” to address deflation.

He said: “Let me be clear: We are accountable to the European people for delivering price stability, which today means lifting inflation from its excessively low level. And we will do exactly that.

The governing council has repeated many times, even as it was adopting new measures: it is unanimous in its commitment to take additional unconventional measures to address the risks of a too prolonged period of low inflation.

This means that we are ready to alter the size and/or the composition of our unconventional interventions, and therefore of our balance sheet, as required”.

At 0.3 per cent, Eurozone inflation is currently at a five-year low, and far from the ECB’s target of ‘below but close to’ two per cent.

Draghi argued the new measures to tackle deflation would be most effective if governments issued reforms to create more confidence in the future potential of economies.

 

Source: cityam- Mario Draghi urges governments to help fight deflation

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