Mohamed A. El-Erian , Columnist

Political Risk Hampers the ECB

A pickup in euro-zone economic activity should have allowed the central bank to declare victory. It hasn’t.

February 23, 2017 at 7:00 AM UTC

Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”

A message for Mario Draghi.
Photographer: John Thys/AFP/Getty Images

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The European Central Bank just can’t get a break. After many years of unconventional monetary measures that have drawn lots of political criticism and attacks and forced it to intervene uncomfortably in the functioning and pricing of financial markets, it was hoping that a pickup in euro-zone economic activity would allow it to declare victory and gradually normalize policy.

Well, the economic pickup is materializing, but it is being accompanied by lower, rather than normalizing yields on risk-free government bonds.