European Central Bank chief Mario Draghi urged eurozone governments to spend more Thursday, while the Frankfurt institution launched new "big bang" interventions to prop up the economy as the outlook darkens. Overcoming publicly-aired divisions on the institution's governing council, the Italian economist announced a key interest rate deeper into negative territory, new net purchases of government and corporate debt and support for struggling banks.
While policymakers are confident in their actions, "one thing... was unanimous, consensus, namely that fiscal policy should become the main instrument" for stoking growth and inflation, Draghi said. The interest rate cut immediately drew ire from US President Donald Trump, who tweeted that ECB policymakers "are trying, and succeeding, in depreciating the Euro against the VERY strong dollar, hurting US exports".
In fact, while the euro fell against the dollar after the ECB announced its monetary policy moves, it was headed back towards earlier levels around $1.102 by the time Draghi's press conference ended around 3:30 pm (1330 GMT). "We have a mandate, we pursue price stability and we don't target exchange rates, period," Draghi said when asked about Trump's reaction.
In the ECB's definition, "price stability" means inflation just below two percent. The moves mean Draghi, who will yield his seat to departing International Monetary Fund boss Christine Lagarde on October 31, has set the tone for her first months - and possibly years - in office, although he will chair a final meeting next month.