Will the ECB ease its monetary policy again?
In view of a gloomy economic outlook and weak inflation European Central Bank chief Mario Draghi is considering adopting a more relaxed monetary policy with further interest rate cuts and bond buying. Draghi's statements at the ECB Forum in Sintra, Portugal, triggered turbulence on the financial markets and drew harsh criticism from US President Donald Trump.
Super Mario in top form again
Draghi's speech is the crowning achievement at the end of his career, economist Francesco Guerrera writes in La Stampa:
“Just as the Eurozone threatened to fall victim to economic sclerosis, incompetent politicians and international tensions, a central banker - a 'lame duck' with one foot in his retirement slippers - has fallen from heaven to rescue the situation (at least for now). The speech in Sintra is the second most significant moment in Super Mario's long career after the famous 'whatever it takes', which he pronounced in July 2012 to save the euro. Simply by saying that the ECB has considerable 'room for manouevre' to revive the economy, Draghi boosted stock markets, made Trump angry and sent an important political message to Merkel, Macron and the Italian government.”
Euro not undervalued for all countries equally
Trump's reaction is only partially justified, economist Nicolas Goetzmann writes in Le Figaro:
“Trump could be accused on two counts: firstly for causing the problem - by threatening a trade war - and secondly for criticising the Europeans even as they try to protect themselves. But from the European point of view that would be a little too simple. Because for economies like France the euro can be considered overvalued. For Germany, however, which has a historically high foreign trade balance compared with the rest of the world - in particular the US - it can be viewed as undervalued. So Trump's use of the term 'unfair' is legitimate as regards Germany, but illegitimate as regards other Eurozone countries.”
Draghi at the helm
Commenting in Público former MEP Rui Tavares sees it as a historical development that in his tweet against Draghi Trump didn't feel the need to explain who the ECB chief is:
“Since yesterday there seems to be an answer to Henry Kissinger's famous question, 'Who do I call if I want to call Europe?': Mario Draghi. Perhaps this was the first time ever that a US president used the name of an EU official - other than that of a French president or a German chancellor - to introduce a comment. Only the name, mind you, without the need for any explanation.”