European Central Bank President Expresses Concern Over Political Developments in Europe and America

Mario Draghi, President of the European Central Bank, warned on Thursday, December 9, about the ongoing ambiguity in the global economy while announcing the institution's decision to continue purchasing bonds from EU member states. According to the German news agency, Mr. Draghi stated at a press conference in Frankfurt that the global financial market has been resilient against the rise of populism worldwide, including Brexit, Donald Trump's victory in the U.S., and the failure of the Italian parliamentary reform referendum. He added, 'Assessing the consequences of these political events is currently difficult' and warned that important elections next year in European countries are key factors contributing to economic uncertainty and instability. Mr. Draghi said, 'Due to the nature of these events, their consequences will become clear in the medium and long term. Uncertainty will spread everywhere.' The President of the European Central Bank announced that the institution will maintain interest rates at the same level, namely zero percent, and will continue its bond purchasing program for member states until December 2017. Initially, this program was supposed to stop in March. However, the European Central Bank plans to reduce the bond purchase budget from 80 billion euros per month to 60 billion euros from April to December 2017. The reason for this budget reduction is optimistic forecasts regarding the growth rate of Eurozone countries. According to these assessments, the average growth rate of the 19 Eurozone countries is expected to increase to 1.7 percent this year and next year. Based on these forecasts, the economies of member countries are expected to grow by about 1.6 percent in 2018 and 2019. According to this institution's predictions, consumer goods prices will slightly increase over the coming years, reaching a desirable inflation rate close to 2 percent. The German news agency reminds that the European Central Bank's forecasts come after a series of positive economic news, one of which is the decrease in the average unemployment rate in Eurozone countries to its lowest level in the last seven years. Meanwhile, the average inflation rate in Eurozone countries reached 0.6 percent in November, the highest figure in two and a half years. Mr. Draghi stated that the European Central Bank is prepared to expand the bond purchasing program if necessary and if economic outlooks are not sufficiently favorable. Another important issue that overshadowed the recent meeting of the European Central Bank's board was the potential consequences of the Italian referendum results on the financial situation, particularly the banking system of that country. However, Mr. Draghi expressed confidence that Italian officials, regardless of the current political crisis, will resolve the banking sector's problems. He said, 'The structural weaknesses of the Italian banking system have been evident for a long time and must be addressed. I am confident that the Italian government knows what to do and will deal with these issues.'