Mario Draghi, You Have a Serious Problem
The ECB needs to wake up to the danger of Europe’s slowdown becoming a recession. There is one tool for further stimulus, though: the TLTRO.
The European Central Bank needs to wake up, and quickly.
Photographer: Alex Kraus/Bloomberg
The European Central Bank needs to wake up. Of all the major central banks, it’s the one that really should be reacting to an evident economic slowdown in its backyard. There’s a danger this might turn into a recession, Europe’s third in a decade.
But being proactive is not in its nature. Its Achilles’ heel is running monetary policy via committee for 19 countries with contradictory needs. Little is expected from its next meeting on January 24th, as this will not include one of its quarterly economic reviews, and it’s too soon to judge any effect from its decision to halt its Quantitative Easing program. Nevertheless, it needs to show that it’s alive to the risk of its 1.7 percent growth forecast for 2019 not panning out.