Another criticism that has been levelled at the Bank is that it does not have the willingness to act in sufficient magnitude. This was also neutered by the measures announced on Thursday, said Draghi.
He also attempted to pour cold water on those critics who suggest that even with both the willingness to act and the increased measures, bank efficacy is waning.
My policies are working, says Draghi
According to Draghi the impact of the policies thus far employed are proven not only by the growth data beginning to come through, but also the changes to credit flows and, in particular the narrowing of credit spreads between the core and the periphery.
“It has translated into a growth recovery. It is not spectacular but it is there. It is gradual and has been continuing now for several months. We haven’t reached our inflation target but it is going to take time and it would be foolish to think we will get back to 2% inflation with an economy that hasn’t recovered yet.”
The last bullet
Some, like Russell Investments senior investment strategist, Wouter Sturkenboom remain less convinced than Draghi that there is much more the ECB can do.
“Taking everything together, today’s announcement was really as much as we could expect and hope for. At the margin it will help support growth and inflation but probably does not make a meaningful difference. Looking ahead, we think the ECB from here on can tinker on the edges but probably can’t meaningfully change the policy mix. For all intents and purposes it has shot its last big bullet.”
The big question from here is whether or not it will be enough to set the region’s financial bones sufficiently so that they can begin once more to knit together. And, perhaps a more pressing point, will markets be prepared to wait?
