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On the first day of work of the ECB Forum, Sintra became a circle of struggles between two titans of the global economy. Representing the European colors, the president of the European Central Bank (ECB), Mario Draghi, admitted in his last "assault" that the economy of the euro zone could have been stimulated in a supplementary way, which had led the US president Donald Trump to take retaliatory action on Twitter.
Mario Draghi, who leaves the presidency of the ECB in October, stressed that the central bank had an arsenal of instruments ready to be used if the economic situation justified it. "In the absence of improvements, that is, if the conditions threatening the return of sustainable inflation persist, additional stimulus will be needed," he said. -he declares.
One of the main objectives of the ECB, as a stabilizer of the euro area economy, is to control the rate of inflation, which remains below target but below 2%. This is why, according to Draghi, "in the coming weeks, the Governing Council will discuss how instruments can be adjusted in proportion to the severity of the price stability risk".
Among the instruments announced by the current President of the ECB is monetary policy characterized by "further reductions in interest rates" as well as "measures allowing for side effects".
So the rules of the game were laid for the euro zone economy, but Trump did not like it.
"Mario Draghi has announced the possibility of further stimulus measures, which would have caused an immediate depreciation of the euro against the dollar," Trump said on Twitter. "That makes them [os europeus] to compete more easily with the United States ".
Mario Draghi has just announced that other stimulus measures could be put in place, which immediately dropped the euro against the dollar, which made them unfairly easier to compete with the United States. United. They have been doing it for years now with China and others.
– Donald J. Trump (@realDonaldTrump) June 18, 2019
After the attack – let's say it's Trump who took the initiative – Draghi counter-attack passively. "We have not looked at exchange rates," said the ECB president, referring to the depreciation of the euro against the dollar at Trump. "
"Our mandate is price stability, defined as an inflation rate of less than or close to 2% in the medium term, and I have just said that we are sometimes ready to use all the instruments necessary to comply with our mandate and that we are not aiming for exchange rates Thank you ".
In addition to the exchange of words between the two representatives of large economic giants, the words of Mario Draghi have had repercussions in several sectors of economic activity. From the fall of returns eurozone countries such as Portugal, Germany and even Italy, although the possibility of further interest rate cuts has stimulated European stock markets.
"Although investors expect Mario Draghi to study how the ECB could operate in such an uncertain and even unfavorable environment, few people were so explicit," analysts at CaixaBank / BPI Research said. "Mario Draghi's statements, along the lines of the Fed's expectations of lowering rates soon in the United States, have generated a strong appetite for the risk of global investors," they explained.
On the future of the Economic and Monetary Union, Mario Draghi has raised the need to quickly conclude the banking union and the capital markets union.
In a context of growing integration of the euro zone economies, "the logic is that the banking union and the capital markets union be concluded more quickly," said the outgoing president of the ECB.
But not only. The basis for the development of the monetary policy stance must also change. With the integration of European economies, "the transition from budget policies, based on a system of rules, to an institutional system with fiscal skills," said Mario Draghi.
Stanley Fischer made two forecasts: if Trump is reelected, the Fed will have a new president and the United States will be the "third world"
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