Expectations of market participants can become true soon, as Mario Draghi declared QE program start in the region. Some outside observers state that at the conference in Jackson Hole the head of the European CB put the basis for an oncoming start of the risk mitigation program.
As the experts point out, Mario Draghi talked about significant influence caused by cyclical factors on a rather high jobless rate in the countries of eurozone and emphasized the monetary policy efficiency in the struggle with cyclical unemployment. Moreover, Draghi fears a decline in inflation expectations. One should also mention that steadiness of such anticipations deterred the European Central Bank from QE program start for a long time. At the meeting in Jackson Hole the head of the European CB appealed to refuse from a severe retrenchment policy, which prevails in the eurozone and focus on the struggle with “sluggish growth” and “low inflation”. With regard to the excessive interference danger, Mario Draghi said that “the risks of 'doing too little' - i.e. that cyclical unemployment becomes structural - outweigh those of 'doing too much' that is, excessive upward wage and price pressures.” Speaking on greater independence in making decisions at the local level, Mario Draghi offered to expand the EU countries' discretion regarding the budget deficit in order to support the economic growth, maintain the inflation rate and reduce the jobless rate at the national level. Mario Draghi also required the governments to be prepared for additional expenditures at the level of 3% of GDP by rules of the EU budget deficit. Thus, Mario Draghi expressed the same intentions as Italy's Prime Minister Matteo Renzi and France's head of state Francois Hollande.
