ECB President: Price Stability Guaranteed
Thursday, President Mario Draghi spoke on the European Central Banks goal to control inflation, not allowing it to sink too low or drift dangerously high — likely referring to the 2 percent ceiling, and the unfortunate recent inflation rate that’s been below 1 percent for a disturbingly extended period. According to Reuters, Draghi made note of the extent of the ECB’s powers to manipulate policy towards a more lose and advantageous set of policies.
“Let me be absolutely clear. We have a mandate to maintain price stability — in both directions,” said Draghi. But when asked what specific moves the bank might make, he said that, “We have several instruments. The choice will depend on what happens,” according to Reuters. Draghi is under a lot of pressure these days with many parts of the eurozone showing poor economic recovery signs, and with a number of conflicting goals on his plate.
Draghi needs to accomplish monetary easing, but also needs to maintain a firm grasp on banking in the eurozone to prevent capital gaps being filled with liquidity. “We want to see confidence staying for a relatively long time before we can say we declare victory,” said Draghi Thursday, according to Bloomberg.
“I would say things are slightly better, [with the recovery] gone from being based exclusively on export growth that is very gradually extending into domestic demand,” said Draghi, according to Bloomberg, noting that “downside risks” to economic health are still very much real.
Draghi has certainly seen worse economic conditions in his time as ECB president though, stubbornly dealing with even the most difficult situations, as he did back when the euro itself seemed to be at risk. “The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough,” Draghi had said at the time, according to Bloomberg.