Draghi rebukes ECB critics, warning of threat to bank independence

European Central Bank chief Mario Draghi on Thursday hit back at German-led critics of the ECB's monetary action, warning that the bank's independence could be under threat.

Speaking at a press conference, Draghi also kept open the door to a new round of monetary stimulus to help boost inflation and economic growth, after the bank left its benchmark refinancing rate at zero and its deposit rate at minus 0.4 per cent.

The ECB stood "ready to act to use all the available instruments in its mandate," Draghi told the press conference in Frankfurt.

He also firmly rebuked critics of the ECB's policies led by German Finance Minister Wolfgang Schaeuble, saying that the attacks placed at risk the bank's independence.

"We have a mandate to pursue price stability for the whole of the eurozone and not just for Germany," said Draghi, who fielded a series of questions on the German criticism at the press conference.

He went on to say "criticism of a certain type could be seen as endangering the independence of the ECB."

Members of Germany's political and economic establishment have expressed concern about the impact on savers and financial houses of the ECB's ultra-low interest rates.

But Draghi said: "We obey the law and not the politicians, because we are independent as stated by the law."

He conceded, however, that "a polite and lively debate might be even welcome" as it helped the bank to explain its monetary policy.

Draghi said worries in the community about ECB independence could lead to businesses deciding against taking risks and consumers delaying purchases as well as resulting in monetary policy taking longer to produce results.

"Our policies work, they are effective," the ECB chief said. "Just give them time to fully display their effects."

What analysts believe has led to the renewed round of criticism of the ECB has been financial market talk that the bank is considering deploying new unorthodox measures to boost economic growth and inflation, such as so-called helicopter money.

But Draghi said that helicopter money was not on the ECB agenda, saying the ECB had never discussed the policy instrument, which would inject funds directly into eurozone households.

He also said that eurozone interest rates would remain at record lows for the foreseeable future.

The ECB also set out on Thursday details of its plans to add corporate bonds to its 1.5-trillion-euro (1.7-trillion-euro) asset purchasing programme, which it said would be carried out by six central banks, including Belgium, Germany, Spain, France, Italy and Finland.

The bank said in a statement that from June this year it would begin purchasing investment-grade bonds from non-bank corporates with a maturity up to 30 years.

Last update: Fri, 24/06/2016 - 08:49
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