FRANKFURT: There appears to be increasing frustration within the European Central Bank over the reluctance of governments to push through unpopular reforms to support the ECB's stimulus measures, the minutes of its April monetary policy meeting showed on Thursday.
At its last meeting on April 20 and 21, the 25-member governing council "strongly reiterated the need for other policy areas to contribute much more decisively, both at national and European levels, in order to reap the full benefits of the ECB's monetary policy measures," the minutes stated.
While there was "no doubt" that structural economic reforms were essential in boosting longer-term growth prospects, it was acknowledged that it was difficult for a European institution to tell elected politicians in nation states what to do.
"It was agreed that giving structural reform recommendations might prove challenging, as structural reform needs differed widely across euro area countries and it was not necessarily possible to generalise at the euro area aggregate level," the minutes stated.
In March, the ECB fired off a new volley of shots in its ongoing battle to avert deflation in the euro area and jumpstart economic recovery in the region.
It slashed already record-low interest rates, said it would pump massive new sums into the banking system and, for the first time, would start buying corporate bonds.
While the ECB was confident these measures were helping, monetary policymakers are concerned that growth and inflation will remain weak unless governments complement the ultra-loose monetary policy with reforms of labour and product markets, and looser fiscal policy.
The minutes are published four weeks after the meeting and the ECB takes great pains not to name the particular council members who voted for or against specific measures or who expressed specific views.
The council also agreed on the need to present a united front against hostility towards the ECB in Germany, where politicians have accused the central bank of expropriating the country's savings through low interest rates and fuelling the rise of right-wing nationalism.
"In light of recent public criticism that had appeared to link the ECB's decisions to developments in the political sphere in a member state, it was viewed as important to reaffirm collectively the independence of the ECB to pursue its mandate," the minutes said.
It appeared unlikely that the ECB would roll out additional measures in the coming months.
"The focus now should be on the implementation of the latest set of decisions," the minutes said.
Turning to the latest downgrades of the International Monetary Fund's economic projections, the ECB governing council viewed them as "rather pessimistic, since some members saw some more positive features in the global environment," the minutes said.
Comments
Comments are closed.