Fra Bloomberg:
Looking out from the top of the European Central Bank’s new tower in Frankfurt, it’s easy to find dark clouds on the horizon.
The view for policy makers is of a euro-zone populace so weary of years of economic turmoil that it’s increasingly electing politicians who say no to pan-European cooperation, and spurn reforms that the ECB says are vital to revive the economy. Trapped by their mandate to prevent deflation, officials fret they might soon be forced to roll out quantitative easing that can never succeed by itself.
In speech after speech, central bankers led by President Mario Draghi have urged governments from Paris to Rome to complement ECB stimulus by overhauling economies and bolstering investment. The response — national foot-dragging on reform and an infrastructure plan from European Commission President Jean-Claude Juncker that won’t deliver spending until well into next year — has disappointed.
“The ECB might just be powerless,” said Daniel Gros, Director at the Centre for European Policy Studies in Brussels. “There are domestic political constraints about which, at the EU level, they can do nothing. The crowd which is yelling for stimulus is basically southern Europe. They say the ECB should do its duty, whatever the governments do.”
ECB Urgency
That tussle provides another dimension to Draghi’s pressure on policy makers as they prepare for their meeting this week. He said on Nov. 21 that officials should stoke inflation “as fast as possible.”
“We do see a degree of urgency in acting, which does not apply only to monetary policy,” ECB Executive Board member Benoit Coeuresaid on Bloomberg Television on Nov. 24. “There is urgency in addressing the labor market issues in the euro zone, in creating jobs. That’s the only way to reconcile the European people with the European project.”
