Draghi: the Qe avoid contagion greek – Il Sole 24 Ore

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This article was published March 12, 2015 at 06:37.

OTHER BENEFITS

The easing succeed

to report to the territory

positive yields

of many sovereigns,

including German

FRANKFURT

In his first speech after the start of the purchases of government bonds by the European Central Bank on Monday, its president Mario Draghi defended yesterday the stimulus plan, the so-called quantitative easing (Qe) , arguing that monetary policy, coupled with a drop in oil prices and a weaker euro, is favoring the recovery in the eurozone and protecting other countries from the effect of contagion of the Greek crisis.

purchases of securities by the central bank are not anything new, “are not conventional, but not against the orthodoxy,” Draghi said, recalling that even the Bundesbank have used it in the 70′s statement is played as a message to the president of the Bundesbank, Jens Weidmann, who was one of the major opponents of the European Qe the board of the ECB, and was delivered at the annual conference of the “ECB watchers”, organized by the Centre for Financial Studies of the Goethe University, stronghold precisely German monetary orthodoxy, whose tutelary deity is the former chief economist of the Bundesbank and the ECB, Otmar Issing. “We can use, and we are using – supported Draghi – monetary policy in a way that can stabilize, and stabilize, inflation in line with our objective.” There can be no ambiguity, told the same conference the current ECB chief economist, Peter Praet, the willingness and ability of the bank to use all the tools to fulfill its mandate. Inflation in the eurozone is at -0.3%, while the goal of the ECB is to stay below, but close to 2%. Draghi has also downplayed the risks to financial stability created by Qe, that can be addressed, in his opinion, with macro-prudential policies.

The effects of Qe were partly anticipated by the markets, he said ECB President, but also after the announcement of 22 January yields fell 25 basis points over German bonds to 20 years and 35 of those Italians. The fall was repeated in Portugal and other countries formerly in trouble, despite the worsening of the crisis in Greece, a sign, according to Draghi, the plan can serve to protect other eurozone countries from contagion. ECB President also rejected the allegations that the European Qe is started too late, listing all the measures taken in the last year, by cutting interest rates to interventions to promote credit. Even the governor of the Austrian Central Bank, Ewald Nowotny, who also in the board has sided against the purchase of government bonds deeming that it was time, he said, at the same meeting in Frankfurt, the Qe will succeed in reporting returns, now negative for many bonds, especially in Germany, but also in several other countries, including Austria, above zero, with the revival of growth and inflation.

Economic developments eurozone, according to Draghi, are going in the right direction. The so-called “index of surprises,” which compares the macroeconomic data with the consent of market estimates, indicates that the latest news is positive, said the central banker. “The recovery is expected to gradually expand and become stronger,” he said. His repeated reference to the weakness of the euro, together with monetary policy and the decline of oil as a factor that has contributed to the upward revision of growth forecasts of the ECB, was one of the elements that caused yesterday a new fall of the currency European currency markets. “There is no ongoing currency war,” said Nowotny, however, noting that the recent fluctuations in exchange rates are not entirely unusual.

Both Draghi is Praet insisted theme dear to the ECB that the policy Monetary must be accompanied by structural reforms that create a favorable investment environment.

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