“Headline inflation has declined significantly over the past twelve months. In November 2013 it was 0,9% and should now be back above 1%. It is essential that inflation rates in the Eurozone return towards the target”. These are the words of the president of the ECB Mario Draghi, speaking at the 24th European Banking Congress in Frankfurt. The reference target is, as known, an annual rate lower but close to 2% (against the current 0,4%), and the Eurotower number one hopes that this will happen "without delay", reiterating that the Central Bank European Union is once again ready to intervene. “Monetary policy can play its part but it is clear that, while monetary policy acts on the demand side, other types of policies must accompany this process or, at least, must not oppose it”.
According to Draghi "this means that the overall orientation of euro area fiscal policies must be in line with our position in the cycle" and "it also means that this orientation must support confidence, always within the framework of governance otherwise the lack of confidence will undermine investment plans and nullify the positive effects of fiscal policy on demand”. Even "structural reforms are an essential part of the necessary policy mix", Draghi said. “We need to create business conditions that are conducive to investment,” thus also aiding monetary policy efforts.
"We cannot stand by and watch - the ECB president warned - but we must be very careful that these low inflation rates do not gradually spread throughout the economy in ways that could worsen the economic situation and the price outlook" . While Draghi speaks, and awaiting the intervention of the president of the Bundesbank Weidmann, the European stock exchanges are traveling in positive territory: Piazza Affari gains more than 1% and all the others also have a "plus" sign.
