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#Draghi: Uachtarán BCE ar rátaí úis, bearta airgeadaíochta neamhchaighdeánacha, neamhspleáchas agus ar héileacaptair

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160310MarioDraghi6The Governing Council of the ECB met in Frankfurt today (21 April). Following the meeting, ECB President Mario Draghi reasserted the independence of the European Central Bank, announced that rates would remain unchanged and provided more detail on the purchase of "non-standard" monetary policy measures.

As expected, the ECB announced that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively.

Non-standard monetary policy

The ECB announced that 'non-standard' monetary policy measures would start in June 2016. It is hoped that the corporate sector purchase programme (CSPP) will be better at reaching the real economy and that it will help inflation rates return to levels below, but close to 2% in the medium term. The programme will be carried out through six national central banks on behalf of the Eurosystem and will be coordinated by the ECB. For full technical details on how the CSPP will work click CSPP.

ECB Independence

President Draghi made a staunch defence of the ECB's independence, but nevertheless felt obliged to say (and tweet) that he had the unanimous support of the governing council, we can deduce from this that the question was asked.

The assurance was needed after it was reported that at a recent event near Frankfurt, where Schäuble was awarded the Wolfram-Engels prize - a sort of 'Ordoliberal of the Year' award - he had attributed the success of the ultra-right wing AfD (Alternative für Deutschland) to the ECB's actions. The Dow Jones reported that Schäuble had said that he had spoken to Mario Draghi and told him that he should feel proud as 50% of the results of a 'party that seems to be new and successful in Germany' could be attributed to his monetary policies. The statement raised concerns about political interference in the workings of the independent Central Bank.

At today's conference the ECB President dismissively replied to one question, saying that Schäuble had contacted him to say that he had 'not said what he meant, or meant what he said', Draghi couldn't remember which - and it didn't sound as if he particularly cared.

'Helicopter money'

Despite much speculation, Draghi repeated that 'we never discussed this' in response to several questions on the possible use of 'helicopter money'. It is unlikely that this will end the speculation, especially following the publication of a Deutsche Bank research paper on this subject. Among other things, the paper examines if there are any institutional restraints to the ECB resorting to this type of instrument; according to the paper, there are no legal barriers to some form of helicopter money.

160421InstitutionalRestonHelicopterMoney

In its conclusions the Deutsch Research paper speculated that with Japan rapidly reaching the limits of its existing policy of negative interest rates, it could be the first to use this type of instrument. Europe may, the paper suggests, want to avail of this tool given the reluctance to make use of 'fiscal space'.

160421DBHelicopterMoney

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