FRANKFURT, Germany (AP) - The head of the European Central Bank is defending the decision to offer monetary stimulus and cut interest rates to record lows against concerns that they hurt savers and favor the wealthy.
Mario Draghi said in a speech in Berlin on Tuesday that low rates are a symptom of weak investment and excess savings, which central banks must take into account. He said low rates support consumption and jobs - benefits that are "always socially progressive."
He said that, overall, "a faster return to full employment should in turn contribute to lower future inequality."
The ECB has cut its benchmark interest rate to zero, and pushed down longer-term rates through a bond-buying program. The steps have frustrated savers who see low returns on conservative investments, while boosting stocks and other assets that are often held by wealthier people.
Draghi chose to speak in Germany, where the ECB's stimulus efforts have come under strong criticism by some economists and legislators who say such measures hurt savers and face diminishing returns. The speech comes at a time when the bank faces a politically fraught decision on whether to extend its bond purchase stimulus program at its next meeting Dec. 8.
The ECB has been buying 80 billion euros ($88 billion) a month in government and corporate bonds with newly printed money. That drives down market interest rates and pumps new money into the financial system. The program is slated to run at least through March, 2017. But now the bank must decide whether to extend it beyond then, and if so, how long. To avoid running out of bonds, the ECB's governing council, led by Draghi, might have to ease some of the restrictions on which bonds it can buy.
One of those rules requires the bank to purchase government bonds according to each country's share of the eurozone economy. Easing that rule to find more bonds could run into charges of political favoritism.
The ECB is the chief monetary authority for the 19 countries that use the euro currency.