Holzmann disagrees with Draghi’s monetary easing, stays hopeful of change under Lagarde

The ECB president, Mario Draghi’s latest package of monetary easing introduced on Thursday, was seen as his parting gift to the Europe zone. The key measures that formed a part of his plan were – bringing interest rates down to -0.5%, parking headline borrowing at zero rate, relaunching of quantitative easing program with €20bn of bond purchases each month, and slashing of growth and inflation forecasts.

Draghi defended his relaxed plan as a much-needed infusion to avert recession risk looming over the economy. But ECB hawks criticized the loosening of the central bank’s policy as an unneeded move. Robert Holzmann, the governor of the Austrian central bank, did not quite agree with Draghi’s approach and hoped that things would change with change in leadership.

Draghi, ECB’s outgoing president, would be replaced by Christine Lagarde in November.

Holzmann, during an interview in Helsinki on Friday, said “I look forward to the strategic review. I’m a fan of bringing things out in the open.”

The Austrian economist stressed on two things, which he was keen to have discussions on – bringing down ECB’s inflation target and ending the central bank’s policy of non-disclosure of the opinion of ECB members during Governing Council meetings.

Overinflation rate, the 70-year-old banker said, “As we have inflation dynamics which put us at 1.5%, why not set the goal at 1.5%?”

He added, “Why do we want to spend a lot of money, a lot of action to move from 1.5% to 2%, if at 1.5% we have stability but at a much lower cost?”

Holzmann, who joined the central bank in early September, succeeding Ewald Nowotny, said that he was looking forward to ECB discussions becoming more transparent, coupled with a voting system.

He said, “I will try to encourage my colleagues to move to a new voting system, to count the votes and publish them. This would help to make people more accountable because then it’s not possible to sit back and hide behind the majority.”

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