ECB’s frustrations with governments unlikely to see an end

In recent days, many policymakers in European Central Bank (ECB), including President Mario Draghi, Bundesbank chief Jens Weidmann have voiced against German criticism over how ECB policy is affecting savings, delaying reforms and even fuelling the rise of populists.

All of them defended ECB’s independence and policy direction and some went further saying that the central bank is having to do where government is lacking, stimulus. With governments, such as Germany keeping their purse tight and many reducing their spending, ECB is left with keep easing to boost growth and cover for austerity.

At latest minutes from European Central Bank (ECB), this policy frustration was evident –

“Members strongly reiterated the need for other policy areas to contribute much more decisively, both at the national and European levels, in order to reap the full benefits from the ECB’s monetary policy measures.”

In recent days, many Euro Zone countries such as Spain, Ireland, and Belgium have issued bonds to benefit from low interest rates environment and extend the maturity of their debt portfolio. However that can hardly be called as fiscally expansive.

With hardline from Germany, Euro Zone’s biggest creditor, there is unlikely to be much of a change, as a matter of fact many German academic are lining up to sue ECB over its latest monetary policy easing.