Never give up, Mario Draghi tells Lagarde as he leaves ECB

FRANKFURT: European Central Bank President Mario Draghi told his successor “never give up” on propping up the euro zone economy in the face of a worsening outlook and little help from governments.
At the last press conference of his eight-year tenure, the man credited with saving the euro from collapsing kept the door open to even more easy money, days before he hands the reins over to Christine Lagarde on October 31.
With inflation languishing at less than half the ECB’s target and an unprecedented revolt against his brand of monetary stimulus, it was hardly a grand finale for Draghi, whose 2012 pledge to do “whatever it takes” to save the euro quashed speculation against the bloc’s most heavily indebted countries. Draghi refused to give specific advice to Lagarde but said his legacy was defined by a single-minded quest to boost price growth in an ailing and divided currency bloc.
“This is part of our legacy: never give up!” Draghi said.
Under him, the ECB abandoned its roots in German monetary orthodoxy, pushing the interest on bank deposits well below zero and buying 2.6 trillion euro worth of assets, mostly government bonds.
Draghi has credited this policy with averting deflation in the euro zone and helping create 11 million jobs in the bloc.
But more than a third of the ECB’s Governing Council opposed a decision to resume bond purchases at the September meeting, and policymakers from the Netherlands, France and Germany took the unusual step of making their disagreement public.
And it’s not just a few prominent hawks who question the wisdom of even more bond buys.
Some 95 per cent of respondents in a Reuters poll of analysts said the stimulus package would not significantly help in bringing inflation back to the ECB’s target of just under 2 per cent.
The ECB made no new policy moves on Thursday, having decided in September to restart bond purchases at a pace of 20 billion euros per month while also cutting its deposit rate to -0.5 per cent and keeping the door open to further reductions.
Despite weak growth across the euro zone, Draghi insisted the benefits of loose money policy far outweighed the risks and rejected the suggestion that the public spat had tainted his legacy.
“Every jurisdiction has disagreements when monetary policy decisions come to be discussed,” Draghi said. — Reuters