European Central Bank chief Mario Draghi faces the most decisive moment of his presidency on Thursday when he tries to heal divisions among policymakers and deliver on his promise to save the euro.
Investors want to hear how the ECB will start a new bond-buying program to help bring down the borrowing costs of Spain and Italy, after disagreements on the Governing Council over the plan were played out in public last week.
Renewed ECB intervention in the euro zone’s bond markets is crucial for buying governments time to come up with a longer-term response to the bloc’s debt crisis.
However, Germany’s Bild newspaper reported that Jens Weidmann, who heads the Bundesbank, considered quitting over the disputed plan although he was dissuaded from doing so by his country’s government. His predecessor Axel Weber resigned last year over the ECB’s first bond purchase program.
Investors are looking for Draghi to back up his promise on July 26 to do “whatever it takes” to preserve the euro, when he speaks after the Governing Council meets on Thursday.
“This meeting is absolutely crucial, because expectations are extremely high. If the ECB does not deliver, we will get into another bad patch,” said Gilles Moec, senior European economist at Deutsche Bank.
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