President of ECB to Start Monetary Policy

• 03.06.2015, 20:32
•  Europe,  World

President of the European Central Bank (ECB) Mario Draghi set date of Monday for his 1.1 trillion euro bond-buying program.

Some German economists are doubtful about Mario Draghi’s quantitative-easing program (QE). However Draghi is very sure that the program will stimulate European economy to move forward. His aim is to return inflation to the ECB’s objective till 2016.

After consumer prices fell 0.3 percent in February, the ECB now predicts more deflation for the future. Prices for 2015 are projected to be flat. For next year inflation should average 1.5 percent and for 2017 1.8 percent. The Central bank’s goal is just below 2 percent, which has not been seen since 2012.

On the other hand the economic growth moves slowly in Europe, as economists are predicting only 1.5 percent grow for 2015, which is only 1 percept for now. For the next year they are planning to have 1.9 percent and for 2017 - 2.1 percent. Since 2007 the economy of Europe has not expended more than 2 percent, Bloomgerg reports.

Critics assure that Eurozone economy will be enlarged anyway, because there are many stimulus for that: oil prices fell by half, the euro falls, because of interest rate cuts, which will foster investments to the zone. According to the critics there is no need for QE, all the arrangements in financial market are directed to boost the economy, but according to Draghi it has not effeccted on the economy growth since 2007.

According to some other critics from Frankfurt, there is a fear that private sector banks may not respond to the ECB’s measures by boosting lending, as there is little demand for cash from companies and consumers. However president of ECB is optimistic to call governments to guarantee growth by making their economies more flexible. According to him the impact of monetary policy will be lower, but the effect can be touchable.