The European Central Bank is faithful to its strategy of a soft monetary policy. ECB President Mario Draghi is resolute to reach the inflation target “without undue delay”. Speaking in Bologna, Italy he assured markets that “If the ECB had to intensify the use of its instruments to ensure that it achieves its price stability mandate, it would”. “Within our mandate, there are no restrictions to our choice, which tools we use or how,” Draghi said. Unlike the European regulator, the US Federal Reserve is raising the key interest rate slowly but surely. Experts think that the difference in the economic landscape of the US and EU accounts for the opposite stance these regulators are taking toward their monetary policies. The American economy is accelerating the pace of its economic recovery; the unemployment rate has fallen to 5%; annualized consumer inflation is approaching the target level of 2%, though with an effort. Meanwhile, the eurozone cannot boast robust economic development. The euro bloc has not been able to ensure steady economic growth; domestic demand is still below the pre-crisis level; the unemployment rate is keeping at 10.8%. Moreover, core inflation has been lagging behind the ECB target of 2% since 2013. Therefore, the US and eurozone’s central banks have to take the polar opposite approaches to troubleshooting. However, both regulators are often criticized for an overcautious approach. The ECB made a predictable decision on cutting the deposit rate by 10 basis points and stated that the QE program would be extended until March 2017. These measures could hardly be considered hawkish. The US Federal Reserve was too hesitant to raise the federal funds rate. So there is something in common between these polar opposite solutions. Both regulators announced long-awaited minor changes in their monetary policies.
