Addressing an audience in Washington on Thursday, the President of the European Central (ECB) Bank Mario Draghi stuck by his guns and defended a policy of historically low interest rates.
On October 26 the ECB is expected to announce whether or not it will begin to unwind its €2 trillion bond-buying programme scheduled to end by the summer of 2018. A number of analysts believe that the ECB will announce the deceleration of the bond-buying programme from the current €60bn a month.
However, on Thursday, Draghi made clear that historically low interest rates will continue “well beyond” the end of the asset buying programme, until the policy objective of 2% inflation is reached.
Earlier on Thursday, the German weekly Wirtschaftswoche published an interview with the President of the Deutsche Bundesbank, Jens Weidmann. Wiedman’s view shared by the political establishment in Germany is that “the monetary policy taps should be turned off” and interest rates must be raised.