European Central Bank President Mario Draghi believes that fiscal austerity in the eurozone is no excuse for its members to leave potentials for growth untapped. But he is refusing to lower interest rates for a boost.
As more and more eurozone countries slip into recession, ECB President Mario Draghi sees "no contradiction" between a push for more growth in the 17-member currency area while at the same time pursuing a course of fiscal discipline and budget consolidation.
"We have to put growth back at the center of the agenda," Draghi told a news conference following the ECB's regular monthly policy meeting Thursday. He said economic growth could be created through structural and political reforms aimed at facilitating job creation and new businesses.
Draghi's remarks are a reflection of growing anxiety among eurozone members that present belt-tightening measures, prescribed under the bloc's fiscal compact, might worsen the crisis.
Last month, the ECB president advocated a "growth pact" to complement fiscal austerity, but rejected calls for growth to be created at the cost of bringing down deficits.
Urging a number of eurozone governments to be "more ambitious" in budget cutting, he said that relaxing fiscal consolidation would "not be much help."
Interest rate conundrum
While Draghi has helped shift the tone of the economic policy debate in the eurozone, he's refusing to ease the central bank's monetary policy in a bid to spur economic growth.
On Thursday, the ECB decided to keep its benchmark interest rate unchanged at 1 percent, apparently in efforts to rein in inflation, currently 2.6 percent, well above the ECB's target of 2 percent.
"We continue to expect the euro area economy to recover gradually during the course of the year," he said, dampening hopes that the bank would lower rates any time soon to boost economic expansion.
Benjamin Reitzes, an analyst at BMO Capital Markets, told AP news agency that the ECB appeared "in no hurry to provide further stimulus in the near term."
uhe/sgb(AFP, Reuters, AP)