Stockholm (Ekonamik) – At the last Monetary Policy Meeting of the Governing Council of the European Central Bank (ECB) led by its outgoing president, Mario Draghi, the central bank decided to hold its rates constant. The decision follows a decision to cut the overnight deposit facility rate last month, the first rate cut since 2016.
“This slowdown in growth mainly reflects the ongoing weakness of international trade in an environment of persistent global uncertainties, which continue to weigh on the euro area manufacturing sector and are dampening investment growth,” the central banker said. Discussing the monetary policy reversal that culminated in last month’s decision, Mr Draghi commented that “during 2017 we gradually changed our monetary policy stance and we were preparing to exit that stance of monetary policy. But then conditions changed and what prevails over everything else is the determination to pursue the mandate for which this institution was created and for which we work. Therefore we had to change course and get back into the present stance.”
Reflecting on his time at the helm of the ECB, Mr Draghi commented that “if there is one general thing I’m proud of, it’s the way in which the Governing Council and myself have constantly pursued our mandate. This is something we collectively should be very, very proud.”
Asked whether he had any advice for Christine Lagarde his successor, “he answered “no advice is needed. She knows perfectly well what she has to do. By the way, she has a long period of time ahead during which she will have to form her own view, together with the Governing Council, about what to do.” Ms Lagarde will takeover as President of the ECB’s Governing Council from 1 November 2019.
To my generation of economists, Mario Draghi will always be remembered as the man that put an end to the Eurozone sovereign debt crisis, telling the Global Investment Conference in London that the ECB would do “whatever it takes to preserve the euro”, on 26 July 2012. To the next generation that does not remember how the entire European project titered at the edge of collapse in those days, he will be remembered as the man who oversaw the largest implementation of negative rates to date. History will tell whether it was a good or bad idea.
Image courtesy of ECB