The President of the European Central Bank thinks it is high time for Germany to reconsider its austerity measures. In response to this statement by Mario Draghi, Angela Markel demanded an explanation.
Draghi, speaking at a symposium, made clear neither monetary nor fiscal policy alone could solve Europe’s problems. As it sounded ambiguously, Markel together with German Finance Minister Wolfgang Schaeuble are still trying to figure out whether it was an official call to abandon the austerity measures Germany so got used to.
Having introduced negative interest rates, Mario Draghi is trying to steer politicians towards fiscal policy as another tool to stimulate the economy. However, given that the state budget policy is beyond the scope of the central bank, Draghi's words were not even recommendation, but merely an opinion. Wolfgang Schaeuble seems to agree to this. "I think he's being over-interpreted," he said speaking about Draghi’s remarks being interpreted as shift of emphasis towards support for more fiscal stimulus. However, he added that this statement may raise questions.
