The door’s wide open to better financial prospects, as they say. Or, at least, that’s the story at the European Central Bank this last Friday. After weeks of speculation about their economic prospects, ECB President Mario Draghi has finally addressed the growing elephant in the room.
The central bank will now ‘do whatever they can do to raise inflation and its corresponding expectation as soon as possible.’
The ECB President opened the door for the union to take more drastic measures to bolster the floundering Eurozone economy. The movement is expected to encourage the Eurozone’s nations to take steps to avoid deflation from spreading throughout the region.
Draghi, amid the meeting in which the news broke, stated that ‘excessively low inflation had to be raised as soon as possible.’ He also curtly stated that ‘there’s now no sure sign of improvement in the coming months [for the Eurozone], and thus, they would have to take immediate action to address the problem.
Now, the ECB President has made it clear that the central bank will ‘throw more money’ into the Eurozone should their current fiscal measures come up short.
The annual inflation target in the Eurozone has been falling short, too short of the ECB’s projected target of under 2 percent. This past October, the inflation rate was at a paltry 0.4 percent.
Many investors have approached the fresh statements with great interest. In fact, many surmise that the ECB is planning to buy up more government bonds. That was also, interestingly addressed by Draghi, who stated that the central bank ‘could widen its purchases to include Eurozone government debts.’
Of course, that’s a strategy that German policymakers aren’t too sure about. Several nations, including the United States and Japan, have used such quantitative easing measures in the past. But, it doesn’t inspire confidence in German policymakers at all, given their fairly staunch views on handing fiscal matters.
Still, other policymakers within the union have reacted positively to the news. We’ll be watching to see how the European Central Bank all but leans toward quantitative easing in the coming months.