ECB rallies against Draghi's farewell stimulus

AMSTERDAM (Reuters) – Conservative policymakers criticized Friday the generous stimulus measures of the European Central Bank, expressing doubts about the need and the effectiveness of a package likely to consume most of the remaining firepower of the bank.

In the face of a prolonged slowdown in growth, the ECB lowered rates deeper into negative territory on Thursday and relaunched new bond purchases with no scheduled end date, a decision that divided the normally collegiate Board of Governors .

Although no votes have been made, sources with direct knowledge of the discussion said more than a third of policy makers were opposed to new asset purchases. pushed by outgoing ECB President Mario Draghi, an unusually high number for an organization that normally seeks consensus.

"This vast package of measures, particularly the restart of the asset purchase program, is disproportionate to the current economic situation and there are good reasons to doubt its effectiveness," said the chief executive. from the Dutch central bank Klaas Knot, often criticized for his ultra-easy attitude. monetary policy, said.

Although disagreements are frequent, ECB decision-makers generally align with decisions and refrain from overtly criticizing their policies.

Bundesbank President Jens Weidmann, another key spokesman, also said the stimulus package was excessive and Thursday's decisions said rates would remain low for a long time.

The ECB rates have particularly upset the Germans. The mass sales journal Bild described Draghi as "Count Draghila", a bloodthirsty vampire who sucks up the bank accounts of German savers.

The governor of the French central bank, François Villeroy de Galhau, ECB board member Benoît Coeure, a French member, the German board member, Sabine Lautenschlaeger and the head of the Estonian central bank, Madis Müller, also expressed dissatisfaction.

Although each decision-maker has one vote, dissidents represented countries accounting for more than half of the euro area gross domestic product (GDP).

Knot said that the eurozone economy was running at full capacity, wages were rising and financing conditions were so easy that they did not interfere with the flow of credit.

"There is growing evidence of a shortage of low-risk assets, price distortions in financial markets and excessive risk behavior in housing markets," added Knot, a board member of the board of governors. the ECB.

At the same time, the head of the Austrian central bank, Robert Holzmann, was worried that the ECB was wrong and that such a large plan should not have been presented before the planned review of the bank, which could even see the inflation target of just under 2%.

"This (criticism) is something I hoped the bank should have done before making that decision," Holzmann told Bloomberg TV.

"It may be that 2% (inflation) for the moment is out of reach and 1.5% also means stable prices, almost stable prices. So it's not necessary to … use all the energy you have to move up to 2% if the cost is too high, "he added.