The answer from Mario Draghi, president of the ECB, to the president of the German Bundesbank, Jens Wiedman, came loud and clear: "Despite the signs of improvement, it is clearly too early to declare victory" on the inflation front and indeed "at the moment there is reason to be cautious in assessing how much the inflation outlook has stabilised”. Mario Draghi spoke Thursday morning at Frankfurt's Goethe University and added that "the continuation of support (monetary, ed) is fundamental” to support the dynamics of prices. “Before making any changes to the current ECB course – interest rates, securities purchases and forward guidance – there is still a need to build a climate of confidence that inflation will reach our medium-term target and remain at that level even in a context of less accommodative monetary policy,” he continued.
However, the ECB president underlines that "the recovery is improving and gaining strength". “The recovery – he points out – is drawing impetus from a virtuous circle between rising consumption, employment growth and labor income”. "Nominal growth is now helping" to reduce debt, and practically for the first time since the introduction of the euro "spending goes up while debt goes down", said Draghi, explaining that for "the contribution of nominal growth is always been decisive for the success” of 'deleveraging', ie the necessary reduction of excessive debt.
