Draghi says will not allow dissenters to block possible ECB action

Thu Dec 4, 2014 12:41pm EST
 
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By John O'Donnell and Reinhard Becker

FRANKFURT/BERLIN (Reuters) - The European Central Bank will decide early next year whether to take further action to revive the euro zone's economy, its president said on Thursday, signalling that he would not allow opposition from Germany or anyone else to stop it.

In his clearest language yet, Mario Draghi underlined the central bank's commitment to supporting the ailing economy of the 18-country bloc, and argued the case for printing fresh money to buy assets such as state bonds.

But his remarks, which came within minutes of a meeting where he clashed with German officials over his ambitions, set him on a possible collision course with the euro zone's biggest and single most important country.

Painting a gloomy picture of the euro bloc's prospects, Draghi announced that the ECB expected economic output to be lower in the coming years than it had predicted three months ago, while a slump in the price of oil would further weaken inflation.

Very low inflation is seen as a trigger for ECB action such as printing fresh money to buy government bonds, a step known as quantitative easing (QE) which Germany opposes.

"QE has been shown to be effective in the United States and UK," Draghi told journalists at a press conference, saying that he would not 'tolerate' the prospect of price stability, the ECB's central goal, drifting off course.

Perhaps most significantly, however, Draghi made clear that he would face down the considerable political opposition to further radical action.

Last week, Sabine Lautenschlaeger, Germany's appointee to the ECB's Executive Board, said now was not the time for state bond buying. But Draghi said there was no need for all 18 countries to agree.   Continued...

 
European Central Bank (ECB) President Mario Draghi addresses an ECB news conference December 4, 2014, for the first time in the ECB's new 1.3 billion euro headquarters in Frankfurt. REUTERS/Kai Pfaffenbach