European Central Bank (ECB) boss Mario Draghi has hit back at critics of the bank’s decisions to keep interest rates low and launch a €1.5 trillion (£1.1 trillion) asset purchase programme.
Draghi, who last week hinted interest rates might be cut further, said low interest rates were not punishing savers. He said inflation adjusted returns did not tell this story and that a hike in interest rates would “simply push us back into recession and rates would stay lower for longer.”
The former Bank of Italy chief also dismissed claims that low rates were fuelling speculation. He told an audience at Deutsche Borse Group in Frankfurt: “Financial crises are typically associated with strong credit growth and rising leverage in the banking system. What we see at the moment, however, is a nascent credit recovery and deleveraging among banks. In fact, coming out of a deep banking crisis, rapid credit growth would really be a ‘luxury problem’!”
Draghi said that boosting growth using the ECB’s monetary policy was not taking the pressure of European governments that need to reform their labour markets – another common criticism.
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