European Central Bank President Mario Draghi is likely to face a grilling tomorrow as the inflation level for the Eurozone reaches the coveted 2% for the first time in 4 years. Draghi has implemented an ultra-easy money policy where borrowing money has been at record lows and the central bank has bought 100’s of billions of debts over the last year.
As inflation starts to rise the strong nations will start to put on enormous pressure on the ECB President as the costs of goods increase but savings don’t. Germany have been calling for the quantitative easing program to be reduced and the interest rate to start to rise.
Jean-Claude Juncker White Paper
European Commission President Juncker released a report arguing for a “multispeed Europe” which would allow the advanced nations in the Eurozone to follow different economic policies. It is unlikely that Draghi will enter this debate but the current extremes on show in EU nations suggests this could be a popular choice.
Dutch Elections Next Week
The Netherlands will head to the polls next week in what could be a huge boost for the right-wing movement across Europe. Geert Wilders who leads the Party for Freedom is ahead in the polls, however may be pushed out if a coalition is required. The movement fronted by Wilders focuses around anti-immigration and a general nationalist anti-EU proposal, Wilders would be keen for the Netherlands to hold their own EU Referendum if voted in.
Mario Draghi when he talks about a more together Europe and how he won’t change economic policy for the stronger nations, could be at risk of fanning the flames. The Netherlands are net contributors to the EU and their savings are not growing due to the interest rate levels. Draghi could provide optimism for the future by announcing forward planning to improve economic conditions. However, if the statement tomorrow suggests otherwise, he may be putting crosses next to Wilders on the ballot paper.