FRANKFURT, Germany (AP) – A sustained economic recovery is finally arriving in the 19-country eurozone, European Central Bank head Mario Draghi said Monday – a recovery he says must be used to complete the euro currency union and fix its problems for good.
Draghi said in a speech at a financial forum in Frankfurt that “most indicators suggest a sustained recovery is taking hold” as consumers and businesses grow more confident and banks become more willing to lend.
The head of the chief monetary authority for the shared currency said the upturn was helped by cheaper oil prices and by the central bank’s stimulus policies.
The ECB has cut its benchmark interest rate to near zero at 0.05 percent and launched large-scale purchases of government and corporate bonds with newly printed money to lower longer-term borrowing costs and raise inflation from worrisome low levels. It says it will purchase 60 billion euros a month through September 2016 for a total of at least 1.1 trillion euros ($1.2 trillion) in added monetary stimulus.
Draghi said Monday that member countries should use the breathing space given them by the central bank’s stimulus efforts. He said they need to pass tough structural reforms that would make their economies more business-friendly so they can grow and prosper – and to enshrine supervision of such policies at the EU level. The 16-year-old currency union is still struggling to overcome troubles with too much government and bank debt that led to Greece, Portugal, Ireland, Cyprus and Spain needing bailout loans from the other countries. Despite two bailouts, Greece is trying to avoid a debt default that could see it leave the euro. Eurozone unemployment remains high at 11.2 percent and prices are falling at a 0.3 percent annual rate.