Carney Backs Draghi’s ECB Stimulus Push to Revive Euro InflationFergal O’Brien and Jennifer Ryan
Bank of England Governor Mark Carney gave his backing to Mario Draghi’s efforts to push the European Central Bank closer to quantitative easing.
Speaking about the downward pressure on prices in the U.K. and the euro area, Carney said ECB policy makers have the “tools and the clarity of mandate to achieve their price-stability objective.”
“I would agree with the orientation of the Governing Council that additional stimulus would be consistent with achieving their inflation mandate,” he told lawmakers at a hearing in London today.
The ECB meets next week to discuss how it will revive inflation after a slump in oil prices sparked the first annual decline in consumer prices in more than five years. That discussion will include government bond purchases, a topic that is dividing policy makers in the euro region.
Carney said it’s important to “draw a distinction” between the situations in the U.K. and the euro region, which is suffering through a period of “persistently low inflation.” He said the drop in oil prices in the past six months is a “net positive” for Britain’s economy.
U.K. inflation cooled to 0.5 percent in December, matching a record low, and Carney said yesterday the rate could fall further in the coming months. Morgan Stanley economists forecast consumer-price growth will ease to 0.3 percent this month and 0.1 percent in February.
Carney said U.K. policy makers are alert to the risks from the weakness in the economy of the currency bloc, Britain’s biggest trading partner.
“We have had continuing discussions about the economic outlook in the euro zone,” he said. “I suspect we will have continuing discussions on the potential implications of persistently low nominal growth in the euro zone both directly and indirectly for the U.K.”