ECB’s Draghi Urges Fiscal Action, Trade Openness to Lift Economy
European Central Bank President Mario Draghi called on euro-area governments to spend more to revive the euro-zone economy.
(Bloomberg) -- European Central Bank President Mario Draghi called on euro-area governments to spend more to revive the euro-zone economy, while also warning that global growth is at risk from trade protectionism.
“The effectiveness of monetary policy can and should be enhanced by other policies,” he said in Washington at meetings of the International Monetary Fund. “In view of the weakening economic outlook and the continued prominence of downside risks, governments with fiscal space that are facing a slowdown should act in an effective and timely manner.”
Draghi is due to attend his final ECB policy meeting on Thursday before ending his eight-year term and handing over to former IMF chief Christine Lagarde. He’s leaving with euro-area inflation at less than half the goal of just-under 2%, growth slowing, and policy makers split over last month’s decision to cut interest rates further below zero and resume quantitative easing.
The president also criticized attacks on central-bank independence, and warned that global trends toward trade protectionism “pose considerable risks” to the world economy. Both are partly allusions to U.S. President Donald Trump’s rhetoric and policies.
“Multilateral cooperation is needed to reduce trade frictions and mitigate risks of major disruptions to global economic activity and financial stability,” Draghi said. “Preserving openness is crucial if the global economy is to thrive and secure its growth potential.”
To contact the reporters on this story: Paul Gordon in Frankfurt at pgordon6@bloomberg.net;Yuko Takeo in Tokyo at ytakeo2@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow
©2019 Bloomberg L.P.