Friday, November 4, 2011
Draghi takes action
Mario Draghi, the new ECB president, has decided to take action almost immediately with a 25 bops cut in the in the ECB benchmark rate to 1.25 percent. He also decided not to ramp up the bond buying program of the ECB. He said the program was supposed to be temporary.
Draghi has now shown that he can be a man of action although 25 bps in a crisis is not overwhelming. He is also a traditionalists by lowering rates instead of buying bonds. He also sounds like a president who will be interested n growth as well as inflation. He will unlikely be a large departure from now former ECB president Trichet. He seems to be a pragmatist who will not be pulled into the fiscal problems of the EU unless absolutely necessary.