President of the European Central Bank (ECB), Mario Draghi, was now “confident” that the monetary stimulus measures announced in June, “will provide the planned boost to demand” and stressed that the institution is “ready” for additional measures.
“I am convinced that the package of measures announced in June will provide the planned boost to demand, and we are prepared to adjust our policy further, “Draghi said in his speech at the meeting of central bankers in Jackson Hole (Wyoming), shortly after the turn of Janet Yellen, president of the Federal Reserve (Fed).
In June, the ECB cut its benchmark rate at a record low of 0.15% and announced other measures to stimulate the flow of credit in the euro area.
Draghi stressed that in the current context of “weak recovery” monetary union “l os risks of doing too little to do too much exceed ” in monetary policy, commenting the high level of unemployment in the euro area, which is at 11.5%.
However, the ECB president avoided discussing the possibility of using a program to purchase bonds similar to those adopted by the Federal Reserve (Fed) liquidity, though he left open the possibility if consolidated for a prolonged low inflation time.
“The ECB could use unconventional instruments to safeguard the firm anchor inflation expectations in the medium and long term , “he added without elaborating.
Low inflation along with high unemployment are the two main concerns of the bank Central.
The eurozone inflation, which in July stood at 0.4%, has over ten months below 1%, rank Draghi described as “danger zone.”
Therefore, the issuing bank, Draghi noted “use all means within its mandate to ensure price stability in the medium term.”
The main mandate is to keep the European body price stability in the euro area , defined as an inflation rate close but below 2%.
While the ECB assesses the stimulus increase in United States, the Fed has already started phasing out the bond buying program and is beginning to consider the hypothetical rate increase for 2015, which would be the first since 2008.
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