ECB ready to act, calls for investment over tax, Mario Draghi says

European Central Bank (ECB) president Mario Draghi said policymakers stand ready to act to support economic growth in the euro area, while calling on national governments to curb tax increases and prioritize investment, according to “The ECB’s monetary policy will stay accommodative for the foreseeable future,” Draghi said Wednesday in a speech at the French National Assembly in Paris. “We have an open mind about all other possible instruments that we may consider proper to adopt, adding that an exit remains distant.”
The Frankfurt-based ECB cut its benchmark interest rate to a record-low 0.5 per cent in May after a six quarters of contraction in the 17-nation currency bloc. At the same time, euro-area nations including France, Spain and Italy have been granted more time by euro-area governments to bring their budget deficits into line with the region’s rules. As they do so, countries should take care not to hinder their economies in the longer term, Draghi said yesterday. “Nations should ensure that fiscal consolidation, which is necessary to contain debt levels, is made as growth-friendly as possible,” he said. “Relying less on tax increases would help sustain citizens’ disposable income. Prioritizing capital investment over current spending would do more to lay the foundations for future growth.”

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