Departing ECB boss Mario Draghi warns of risks to eurozone economy and defends his eight years of loose policy as he leaves the stage

  • Draghi defended his loose monetary policy stance taken throughout his time
  • He said improvements in the eurozone 'more than offset negative side effects'
  • The eurozone economy continues to remain close to stagnation

By CAMILLA CANOCCHI FOR THISISMONEY.CO.UK

Updated:

The departing president of the European Central Bank, Mario Draghi, said the eurozone continues to be vulnerable to 'downside risks' and kept the door open to more stimulus as he prepares to hand over to Christine Lagarde at the end of the month.

The man who famously pledged to do ‘whatever it takes’ to save the single currency at the height of the euro crisis, today also defended his loose monetary policy stance and downplayed divisions within the bank.

In his last conference after eight years at the helm of the ECB, Draghi described his choice to cut interest rates to record lows and print more money as 'positive', adding that improvements in the eurozone economy 'have more than offset the negative side effects'.

Departing: Mario Draghi will hand over the reins of the ECB to Christine Lagarde at the end of October

Departing: Mario Draghi will hand over the reins of the ECB to Christine Lagarde at the end of October

His comments come as the eurozone economy continues to remain close to stagnation, with fresh data showing a further steep decline in manufacturing output and one of the weakest service sector expansions since 2014.  

But Draghi said that recent weak economic data have confirmed the ECB was correct to announce new stimulus last month.

'Unfortunately everything that has happened since September has shown abundantly that the Governing Council's determination to act was justified,' he said. 

And he downplayed divisions within the ECB after a public split over further stimulus announced last month, as he said: 'I feel like someone who tried to comply with the mandate in the best possible way.

'These disagreements are often made public and often they are not, so ... I have taken this as part and parcel of the ongoing debate and discussions.'

His comments come as he kept interest rates unchanged at minus 0.5 per cent at today's meeting, and reiterated that the ECB's open bond purchases will start in November, at a rate of €20billion euros per month and will run 'as long as necessary'.    

Meanwhile, speaking of the future of the eurozone economy, Draghi said: 'The risks surrounding the euro area growth outlook remain on the downside. In particular, these risks pertain to the prolonged presence of uncertainties, related to geopolitical factors, rising protectionism and vulnerabilities in emerging markets.' 

Draghi and his aggressive monetary policy have been credited with saving the euro from collapse. 

Former International Monetary Fund managing director Christine Lagarde

Former International Monetary Fund managing director Christine Lagarde

However, eurozone countries struggle with weak growth and inflation across the bloc is languishing at less than half the ECB's target of 2 per cent.  

'Historians may one day bill him as the ‘man who saved the euro’. But Mario Draghi checked out from the ECB with a whimper not a bang,' said James Bentley of Financial Markets Online.

'With the German economy teetering on the edge of contraction and growth slowing badly across the Eurozone, the ECB’s Governing Council has already unveiled a raft of monetary stimulus measures.' 

'The trouble for Ms Lagarde is the cupboard of stimulus measures is now nearly bare. If eurozone growth continues to head south she will have fewer tools at her disposal to turn it around.' 

 

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