29 April 2014

Bloomberg: Draghi tells German lawmakers ECB bond-purchases unlikely

The central bank stands ready to embark on QE if needed, Draghi said at the gathering attended by lawmakers from parties that form the nation’s coalition government, a euro area official told reporters yesterday. The person declined to be identified because the meeting in Königswinter, Germany, was private.

Draghi has said he is considering unprecedented measures from negative interest rates to QE to avert the risk of deflation as he guides the euro area through a gradual economic recovery. Government and central-bank officials in Germany, the region’s largest economy, have been among the strongest opponents of his more radical policies amid concern the ECB will overstep its mandate.

While the ECB expects a prolonged period of low inflation, Draghi doesn’t see the imminent threat of falling prices, he told lawmakers, according to the official.

"These comments may be a sign that the economic recovery in the euro area will be strong enough after all for inflation to pick up without further ECB action", said Christian Schulz, senior European economist at Berenberg Bank in London. "Of course, it may also mean that technical preparations for QE are still on its way but that it may take the ECB some time to come up with something."

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