European Central Bank (ECB) President Mario Draghi on Thursday appealed to Germany and other EU countries with low public debt to pursue an expansive fiscal policy in order to help boost a slowing European economy.
The ECB also announced yet another package of stimulus measures, including lowering lending rates and the resumption of the bond purchasing programme, which will be reportedly maintained for as long as necessary.
Greece may also benefit from these decisions, as there are good prospects that Greek bonds will be included in the ECB's new quantitative easing programme. After Draghi's announcement the yield on Greece's 10-year bond fell to 1.49 pct from 1.61 pct yesterday.
The head of the ECB clarified that the decisions were unanimous after new data showed a slowdown in the euro area's growth.
In addition, the ECB has revised its forecasts for the Eurozone's GDP growth downward relative to June, forecasting that GDP growth in 2019 will reach 1.1 pct, from a previous forecast of 1.2 pct, and just 1.2 pct in 2020 from a previous forecast of 1.4 pct, while keeping the forecast of 1.4 pct for 2021 unchanged.
As the outgoing ECB president said, monetary policy has reached its limits. The 11 million new jobs created in the Eurozone in recent years, as well as continued GDP growth, are due solely to the ECB's monetary policy measures. But now, he said, countries with sufficient fiscal space need to have their own "fiscal policy kick into action."
"All (EU) countries should step up their efforts to achieve a more growth-friendly mix in public finances," Draghi said.
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