Mario Draghi Searches for the Crash Mats
The ECB president was headed for a perfect 10 for his performance in saving the euro. But an incipient slowdown risks spoiling his routine.
The ECB’s monetray gymnastics can’t go on forever.
Photographer: L. Blandford/Hulton ArchiveLike Nadia Comaneci at the 1976 Olympics, Mario Draghi might have hoped for a perfect 10 from anyone judging his performance as president of the European Central Bank. But an incipient slowdown in the euro zone risks spoiling his routine just months before he bows out. The ECB’s decision to end its net asset purchases at the end of 2018 is starting to look premature.
Last week, Draghi had to acknowledge that the risks to the currency union’s economy had shifted to the downside. A slowdown in China and the threat of protectionism are curtailing euro zone growth, which relies heavily on exports. Cheap oil and a strengthening labor market are positives. But the International Monetary Fund has just revised sharply lower its prediction for euro zone growth in 2019, after serious stutters in Italy and Germany. The ECB’s target of keeping inflation at slightly below 2 percent is at risk.