As the European Central Bank battles to revive inflation and sustain economic growth in the 19-nation euro area, it has come under attack from German politicians who say the policy burdens savers and wrecks retirement plans. The euro had been happily on its way down to $1.08; by the time currency traders were enjoying their first evening tipple that day, it had strengthened to $1.12, its highest in almost a month.”The ECB is independent in its policy”. This rate is aimed at discouraging banks in Europe from putting their money with the central bank, and encourage them to lend to borrowers in the region.
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Data from the Federal Customs Administration showed that Swiss foreign trade surplus increased in the three months ended March from a year ago, as imports fell faster than exports. The ECB president left eurozone interest rates unchanged, as expected, and did not pull any rabbits out of the hat in his question and answer session with journalists.
ECB President Mario Draghi kept borrowing costs at rock bottom levels on Thursday, sticking to his course of ultra-loose monetary policy in spite of a barrage of German criticism of his recipe for tackling the euro zone’s economic malaise.
The European Central Bank (ECB) announced Thursday that it will keep its interest rates the same.
Low rates continue, helicopter money grows. Its finance minister Wolfgang Schaeuble has been a vocal critic of the bank – he says that it is causing “extraordinary” problems in Germany and that its policies have become one of the factors pushing voters towards the far-right anti-immigration AfD party.
The ECB made a decision to chart a steady course on Thursday, keeping policy unchanged at their April 21st meeting.
All this put Mr Draghi under fire himself, from German politicians resentful of his loosey-goosey policies.
Draghi signaled last time that the ECB has tilted away from using interest rates as an easing tool and will instead focus on easing credit conditions through bank loans and quantitative easing. “We do expect a continuation of market volatility, certainly, until the referendum… probably, even after the referendum”, Draghi said at a press conference. We believe that the meagre breakevens that have been priced in are low, particularly in light of central bank inflation targets.
“Low interest rates are a symptom of low growth”, Mr Draghi said.
In his regular press conference following the latest European Central Bank monetary policy decision, President Draghi’s main message was one of determination to combat low inflation.
The ECB’s bond-buying programme was also expanded in March from €60bn a month to €80bn. And in doing so he is enraging the biggest economy in the Eurozone.
Bloomberg has more on the German-ECB standoff.
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“The ECB is still on high alert and would be willing to implement even more stimulus if the recovery falters or low inflation leads to negative second round effects”, he said.
