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Draghi Tells German Lawmakers ECB Bond-Purchases Unlikely

ECB President Mario Draghi
Mario Draghi, president of the European Central Bank, has said he is considering unprecedented measures from negative interest rates to QE to avert the risk of deflation as he guides the euro area through a gradual economic recovery. Photographer: Andrew Harrer/Bloomberg

April 29 (Bloomberg) -- European Central Bank President Mario Draghi told German lawmakers that a quantitative-easing program isn’t imminent and is relatively unlikely for now, according to a euro-area official present at the meeting.

The central bank stands ready to embark on QE if needed, Draghi said at the gathering attended by lawmakers from parties that form the nation’s coalition government, the official told reporters yesterday. The person declined to be identified because the meeting in Koenigswinter, Germany, was private.

Draghi has said he is considering unprecedented measures from negative interest rates to QE to avert the risk of deflation as he guides the euro area through a gradual economic recovery. Government and central-bank officials in Germany, the region’s largest economy, have been among the strongest opponents of his more radical policies amid concern the ECB will overstep its mandate.

While the ECB expects a prolonged period of low inflation, Draghi doesn’t see the imminent threat of falling prices, he told lawmakers, according to the official.

“These comments may be a sign that the economic recovery in the euro area will be strong enough after all for inflation to pick up without further ECB action,” said Christian Schulz, senior European economist at Berenberg Bank in London. “Of course, it may also mean that technical preparations for QE are still on its way but that it may take the ECB some time to come up with something.”

Inflation Survey

Inflation in the 18-nation currency bloc slid to 0.5 percent in March, the lowest rate in more than four years and below the ECB’s goal of just under 2 percent. Consumer prices probably rose 0.8 percent this month from a year earlier, according to the median of 37 estimates in a Bloomberg News survey before data on April 30.

Draghi said this month that ECB officials are unanimous in their willingness to use unconventional tools if needed to support the recovery. In a speech in Amsterdam last week, he said the central bank could start broad-based asset purchases if the medium-term outlook for inflation worsens.

When the ECB announced an unlimited bond-purchase program in 2012, Bundesbank President Jens Weidmann insisted that his opposition to the program be made public. The still-untapped OMT program was challenged in Germany’s Federal Constitutional Court, which this year asked for guidance from the European Union’s Court of Justice.

To contact the reporters on this story: Stefan Riecher in Koenigswinter, Germany at; Brian Parkin in Koenigswinter, Germany at

To contact the editors responsible for this story: Craig Stirling at Paul Gordon

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