Following Japanese Prime Minister Shinzo Abe’s footsteps, European Central Bank (ECB) chief Mario Draghi appears to be implementing his own three-pronged plan to rescue the euro zone economy.
“It now appears – based on European Central Bank President Mario Draghi’s recent Jackson Hole speech – that the ECB has a similar plan in store for the euro zone,” Nouriel Roubini, chairman of Roubini Global Economics wrote in an op-ed published on Project Syndicate’s website on Sunday, referring to “Abenomics” – Abe’s economic revival plan consisting of fiscal stimulus, monetary easing and structural reforms.
At the annual central bank symposium in Jackson Hole on August 22, Draghi acknowledged that inflation expectations have declined – a key pre-requisite for Large Scale Asset Purchases (LSAP), according to strategists. He emphasized the need for policies to boost aggregate demand, suggesting the European Union should coordinate higher fiscal spending. He also suggested the ECB would be prepared to conduct LSAP to support EU-administered infrastructure spending.