Draghi: ECB has ‘Plenty of Instruments’ to Boost Inflation
FRANKFURT, Germany – European Central Bank head Mario Draghi says the eurozone’s monetary authority has “plenty of instruments” available to boost inflation that’s too low.
He added that the bank’s governing council has “the determination and the willingness and the capacity… to act and deploy these instruments.”
Draghi made the comments Friday during a question and answer session at the World Economic Forum in Davos, Switzerland.
A day earlier, the bank left its key interest rates and bond-purchase stimulus unchanged – but indicated that it would look at more stimulus at its next meeting March 10.
Annual inflation of only 0.2 percent in the 19 countries that use the euro currency is far below the bank’s goal of just under 2 percent considered best for sustainable growth and jobs.
Draghi didn’t say what instruments might be used. At its Dec. 3 meeting, the bank extended its 60 billion euros in monthly purchases of bonds by six months to March 2017. The purchases stimulate the economy, in theory, by pushing newly printed money into the financial system in hopes banks will lend it. It also cut the interest rate on deposits from commercial banks to minus 0.30 percent from minus 0.20, a move that penalized banks for hoarding money in hopes they will lend it instead.
The central bank is also offering unlimited, cheap credit to banks.
Europe’s economy is growing modestly and unemployment is high at 10.5 percent but falling. Steep falls in the price of oil, however, have undermined ECB efforts to push up inflation.