ECB’s Mario Draghi Ignores German Criticism of Loose Money Policy

ECB’s Mario Draghi Ignores German Criticism of Loose Money Policy

$DIA, $SPY, $QQQ, $VXX

Thursday, European Central Bank (ECB) President Mario Draghi ignored German criticism of the central bank’s ultra-loose monetary policy and vowing to use all the “tools” at his disposal for “as long as needed.”

He said the ECB’s policy was working, which helped boost the Euro.

In a strong defense of the bank’s independence from political interference, Mr.  Draghi also stepped up his calls on Eurozone governments to help get the region’s economy on a more solid footing through fiscal policy and ambitious reforms.

Speaking to reporters at at press conference after the bank’s governing council as expected kept Key rates on hold and refrained from further stimulus moves for now, Mr.Draghi said the independence of the Frankfurt-based ECB was anchored in the EU treaty.

“We have a mandate to pursue price stability for the whole of the euro zone not only for Germany,” he said at the press conference.

“We obey the law, not the politicians, because we are independent as stated by the law.”

The comments came after German Finance Minister Wolfgang Schaeuble sharply attacked ECB policies, arguing they were causing “extraordinary” problems for Germany and were in part to blame for the rise of the right-wing anti-immigration Alternative for Germany (AfD).

Mr. Draghi repeatedly stressed that inflation remained far off the bank’s target of near 2% and argued that the Eurozone economy still faced a numbr external risks and would be in a worse state today had the ECB not resorted to negative interest rates to accompany a EUR 1.7-T($1.92-T) money-printing stimulus scheme.

He said the central bank would begin buying corporate bonds as part of its QE (quantitative easing) policy in June.

Central banks worldwide have been keeping money very cheap.

Despite a rally in Crude Oil prices, long-term inflation prospects have barely improved. The Eurozone 5-year breakeven rate, a Key market-based expectation that predicts long-term inflation, dipped to 1.39% Wednesday, well below the 1.49% when the ECB announced its March QE package.

Thursday the US major stock market indexes finished at: DJIA -113.75 at 17982.52, NAS Comp -2.24 at 4945.89, S&P 500-10.92 at 2091.48

Volume: Trade came in above average with about 990-M/shares exchanged on the NYSE

• DJIA +3.2% YTD
• S&P 500 +2.3% YTD
• Russell 2000 +0.0% YTD
• NAS Comp -1.2% YTD

Stay tuned…

Paul Ebeling