Mario Draghi, the European Central Bank president, is reaching deep into his toolbox to revive the region’s moribund economy. He is cutting interest rates to the bone. He is charging banks even more to park their money. And he is using the central bank’s financial muscle to spur lending.
But the question is whether the new actions, announced on Thursday, will be enough to fix Europe’s problems. If they don’t, Mr. Draghi doesn’t have many options left. “It’s a positive step by the E.C.B.,” said Carl B. Weinberg, chief economist of High Frequency Economics in Valhalla, N.Y. But he added, “no matter how you look at it, monetary policy has done all it can.”
Mr. Draghi’s aggressive moves reflect the gloomy, if familiar, state of the European economy. Low inflation and stagnant growth feed on each other in a vicious cycle, making existing debt burdens more onerous and making adjustments between the more prosperous Northern European nations and weaker southern ones more painful. The situation has confounded policy makers and politicians who are now grappling with how to prevent another full-on recession.