The European Central Bank (ECB) is ready to do more and to use unconventional measures to low inflation and weak growth, which weighs on the labor market with a persistent high unemployment. The ECB president Mario Draghi, from Jackson Hole, reassures Frankfurt stands ready to adjust its monetary policy and act to support the economy even beyond the measures already announced in June. But it warns that the accommodative monetary policy is central but does not replace governments and national structural reforms, on which you must press to promote growth and employment. Draghi meanwhile approaches to the positions of premier Matteo Renzi, softening tones sull’austerity and stating that countries should be encouraged to spend more within The actual flexibility of the fiscal rules can be “used to better address the weak recovery and make room for the cost of the necessary reforms,” says the number one of the ECB, stressing that the political budget might be more conducive to growth. You can reduce it – remember Dragons – taxes so “neutral”, ie without increasing the deficit, so how can greater coordination at European level, as may be appropriate, “an extensive program of public investment” in line with the proposal the President of the European Commission.
existing European standards.
An opening to the flexibility of the Dragons, who will be “welcome” to Rome and Paris, notes the Financial Times, noting that the thrust of Renzi on budgetary rules was supported by French President Francois Hollande.
“Even if Draghi’s comments do not represent support for rampant spending to push the euro area economies – shows the Wall Street Journal – show a departure compared to years in which the ECB had highlighted the need to reduce the deficit and attract economic reforms even during periods of economic weakness. “
The intervention of the president of the ECB Jackson Hole below the frost came from the German GDP and French, who have gone on to add to the slowdown of Italy, presenting a challenging environment for the euro area, which is likely – according to the Nobel Prize Economics, Joseph Stiglitz – a Japan style lost decade.
“The stakes are high for the monetary union,” added Draghi, stating that accommodative monetary and fiscal policies “can not replace the necessary structural reforms.” Fiscal policies can be improved and to gain time but in the end the reforms needed. The ECB stands ready to do its part, to go beyond the measures already announced and on which Draghi says ‘confident’. But structural reforms on the job “no longer be postponed,” Draghi warns, urging governments to act.
“We will launch our first Tltro in September, which has already generated significant interest from the banks’ purchases of ABS and should contribute to further monetary easing. Since the announcement of the measures’ we have seen movements in exchange rates which should support both aggregate demand and inflation, which we expect to be supported by the various roads of monetary policy in the United States and the euro area. “
The reference is to the different streets of the Fed and the ECB, the central bank that will start to close the plan to purchase securities and opens to a possible increase in interest rates sooner than expected if the progress in the labor market will be faster than expected. At the same time, though progress will be slow, the rates will remain low for longer.
The chairman of the Fed, Janet Yellen, remains cautious and therefore speaks of a “recipe is not easy,” the Monetary Policy in this context. A ” dilemma ” as employment for the Fed: Despite the advances, a full recovery of the labor market remains difficult because of the “depth of the damage” caused by the recession. “Significant structural factors had an impact on the labor market, including the aging of the population and other demographic trends”, such as ” polarization ”, ie the reduction of jobs with average skills.
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