Mario Draghi said the European Central Bank’s quantitative-easing program is working better than expected, even though the institution will take longer than intended to reach its inflation goal.
“We are satisfied with QE, as it has met and even surpassed our initial expectations,” the ECB president said in an interview with Greece’s Kathimerini published on Saturday. While “it presently appears that it will take somewhat longer than previously anticipated for inflation to come back to, and stabilize around, levels that we consider sufficiently close to 2 percent,” that is largely because of a drop in oil prices, he said.
Draghi cited lower borrowing costs, rising credit volumes and better access to loans for small businesses as signs that QE is having a positive effect. Even so, with the inflation rate below zero for the first time since March, and an emerging-market slowdown posing risks, he has said the ECB is ready to expand its asset-purchase program if needed.
Malta Meeting
Economists and investors are speculating whether the ECB will take steps to boost its 1.1 trillion-euro ($1.2 trillion) bond-buying plan. The central bank holds its next monetary-policy meeting on Oct. 22 in Malta.
In the interview, Draghi also said that Greece needs both “an element of debt relief” and a decisive implementation of the terms of its bail-out program. He said the country has a “good chance” of returning to growth again in 2016, and reiterated that the crisis which brought the country to the brink of exit from the euro area highlighted the weakness of the currency union’s current institutional framework.
“A union where the central bank is called upon by certain politicians to decide on the membership of certain states cannot be right,” he said. “The central bank should just do the work of a central bank, i.e. maintain price stability over the medium term, and should not be called upon to take such decisions. That is why we have to move toward greater political integration.”
