Change of course in ECB's interest rate policy?

ECB chief Mario Draghi has made it clear that the ECB has no intention of lowering interest rates even further after years of an expansive monetary policy. The benchmark interest rate will, however, be left at its current level of zero percent for the time being. Some commentators criticise the central bank's lack of resolve. Others say its cautious approach makes sense.

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Der Standard (AT) /

ECB still putting out fires where there are none

The ECB's decision to once again leave the benchmark interest rate at its present level testifies to a lack of resolve, Der Standard criticises:

“In this phase it would be important to send a signal that the Eurozone has for the most part emerged from the years of crisis. … The memory of a committed-looking Mario Draghi playing the firefighter and the using the catchphrase: 'whatever it takes' in mid-2012 when he was fighting for the survival of the Eurozone is still fresh. He succeeded back then. But when it comes to the step-by-step normalisation of monetary policy he and the members of the council appear nothing short of irresolute. Now it looks like the fire brigade is still busy putting out flames even though the workmen have long since started repairing the damage.”

Les Echos (FR) /

Draghi's cautious approach understandable

The ECB's decision not to give up its ultra-lax monetary policy yet is motivated by two things, Les Echos explains:

“The first is inflation. … Growth is back, but if you adjust for fluctuation factors (oil, food prices, etc.) prices aren't going up. Naturally the ECB is worried about this. Its main task is to keep inflation stable at around two percent. The second reason is - even if Draghi can't admit it - Europe's full election calendar. The worst was averted in France but the parliamentary elections are still pending. Their outcome will determine Macron's ability to introduce reforms. And two more important election dates are coming up in the autumn: in Germany and in Italy. The complexion of the governments (or coalitions) that emerge in these two countries will define the political future of the Eurozone.”