Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Draghi Says ECB Policy Has Helped Reduce Inequality

Posted by hkarner - 28. Juni 2017

Date: 27-06-2017
Source: The Wall Street Journal

ECB chief indicates it would be counterproductive to withdraw stimulus too soon
Mario Draghi speaks to university students in Lisbon on Monday.

Mario Draghi speaks to university students in Lisbon on Monday.

LISBON—European Central Bank President Mario Draghi defended the impact
of the bank’s stimulus policies on Europe’s youth Monday, arguing that keeping interest rates low had helped create jobs and reduce inequality.

The rare question-and-answer session with Mr. Draghi, at a university in Lisbon, comes at a sensitive time for the ECB, which is preparing to discuss how to start withdrawing policies such as negative interest rates and a €2.3 trillion ($2.6 trillion) bond-buying program.

Pressure is mounting in Northern Europe for a policy change from Frankfurt, but Southern European countries face a different economic reality, with youth unemployment rates reaching up to 45%.Mr. Draghi argued that the ECB’s easy-money stance helped address the problem of inequality in Europe, which he described as a “highly destabilizing phenomenon.”

“The biggest cause of inequality is unemployment,” Mr. Draghi said. “To the extent our policy fights unemployment, it fights inequality.”

While he didn’t directly address when the central bank might start withdrawing its stimulus, he indicated it would be counterproductive to do so too soon.

Tackling a question from Germany on how millennials could build up wealth in an environment of low interest rates, Mr. Draghi argued that those young people “who got a job thanks to our monetary policy” might not be so opposed to low rates.

German officials have attacked the ECB’s easy-money policies in recent years, arguing that they harm savers and pensioners.

“Let’s not forget that savings come from growth,” Mr. Draghi said. “Interest rates have to be low for growth to recover.”


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