The rigor becomes ‘soft’ – Il Sole 24 Ore

The rigor becomes 'soft' – Il Sole 24 Ore

History article

Close

This article was published on 23 August 2014 at 09:45.
The last change is the 23 August 2014 at 10:01.

Pulled in many voices in Europe to do its part for the economic recovery, Mario Draghi yesterday sent a clear signal to governments that monetary policy will play a central role, but raised on fiscal policies and structural reforms.
respect to the latter, the words of the Dragons at Jackson Hole is not surprised: “There is sufficient amount of monetary or fiscal stimulus that can replace the necessary structural reforms.” Moreover at this point the ECB president had devoted many of his more recent interventions. Structural reforms can be the bargaining chip that governments will have to spend to get an ECB that goes beyond what has already been promised.

It is, however, on fiscal policy that, without abandoning the defense of European rules budget, Draghi has taken on a different tone and more accommodating, probably taking into account the marked deterioration in the eurozone in recent months, which puts into question, even by the admission of the Bundesbank, the ability to recover in the second half of the year. There is room, he said, because fiscal policy can complement monetary policy in boosting employment. Three of the most significant points of his speech, in addition to the repeated suggestion of reckoning with unproductive public spending cuts accompanied by tax reductions.

The first is the emphasis on the margins of flexibility in the Stability Pact, which can be made to take their adoption of reforms. The second is the recognition that different countries are in different situations with regard to public finances and then some public budgets have space to encourage growth. The third is the support net floor Juncker public investment at European level. The key phrase of the speech is that the risk of doing too little to combat unemployment is higher than the risk of doing too much. Wage and price pressures there are none. Indeed, almost all the data coming from the European economy signal a weakening of growth and a further decline in inflation. The forecasts of the ECB in September will take account of filings but it will not such as to justify new measures in addition to those anunciati.
Draghi reiterated that the ECB is ready to do another (reluctant) step forward. But he reminded governments that can not

Permalink