The European Central Bank announced today at the conference that they have left the eurozone interest rates at their current record lows.
Mario Draghi, president of the ECB, spoke from Frankfurt today and labelled protectionism, emerging market vulnerabilities and financial market volatility as the key risks to eurozone recovery.
Draghi went onto highlight the importance of protecting “precious” central bank independence.
Perhaps in a swipe to Donald Trump, who has put pressure on central banks to change policies, the ECB president said:
“Central bank independence is a precious thing. It’s precious because it’s essential for the credibility of the central banks, and credibility is essential for effectiveness.”
“Actually, the legislators themselves, who are often the very same people who are arguing for the central bank to do this or that, should be the first ones to care about monetary policy effectiveness and central banks achieving their goals.”
In regards to Rome, Draghi attempted to stay clear Italy’s 2019 budget, saying it was a fiscal discussion.
However, he did add that he was “confident” that a deal would be reached between Rome and Brussels over the budget.
Reacting to the ECB conference today, Silvia Dall’Angelo, who is the Senior Economist at Hermes Investment Management, said:
“The bottom line is that the ECB is on a gradual path of monetary policy normalisation for now, but risks from protectionism, a further slowdown in external demand, domestic political instability, Brexit and volatility in financial markets cast a dark shadow on the ECB’s plans.”
“Policy uncertainty has increased both externally and domestically: international trade tensions have remained high, there is no solution for the Brexit issue in sight, and the Italian government seems determined to defy the European fiscal rules. The recent turmoil in financial markets is a new addition to the list of downside risks,” she added.
