Macroscope | ECB chief Draghi shifts emphasis from austerity to stimulus
ECB chief moves closer to France and Italy but is unlikely to find friends in Germany, where the public is sceptical of loose monetary policy
Prodding governments to do more to boost demand and hinting at European Central Bank action to go along with it marks a major shift in chief Mario Draghi's euro-zone policy away from a focus on austerity towards reviving growth.
In a speech on Friday, the ECB president said it would be "helpful for the overall stance of policy" if fiscal policy could play a greater role alongside the ECB's monetary policy.
The comments marked an end to the tacit coalition of ECB support in combination with German-style fiscal austerity that has been in place since the outbreak of the euro-zone crisis.
Draghi is now positioning himself closer to France and Italy. In effect, he is placing more of an emphasis on fiscal stimulus than austerity.
"It's an enormous change," said ING economist Carsten Brzeski. "It is admitting that the recovery might not come, that the euro zone's problems go beyond structural reforms and austerity measures. It might be a U-turn for how the ECB looks at fiscal policy but not so much for how it looks at monetary policy."
The euro-zone economy is in danger of slipping again into recession and inflation is barely registering in many places.
