ECB's Draghi to retire as populists target EU central bank - Bloomberg
|As reported by Bloomberg, the European Central Bank's (ECB) chief, Mario Draghi, is set to retire this year, but growing calls throughout the European bloc that throw economic blame on the central bank are growing as populist movements gain traction, threatening the ECB's powerbase.
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The economy is slowing again and nationalists across the bloc are challenging the principles of European integration, so the contest adds an extra layer of uncertainty as the ECB seeks to withdraw the crisis-era stimulus that’s kept interest rates at record lows.
One risk is that the next slowdown strikes before policy makers have a chance to tighten significantly, leaving a new president with little ammunition to support the economy and a firebrand in Rome, Paris or even Berlin blaming the central bank for stacking the deck against their supporters.
Before addressing the issue of who should replace Draghi, probably over the summer, European Union leaders have to navigate the bloc’s parliamentary elections in May.
That could strengthen the hardliners centered in Germany who’ve long been demanding tighter policy and opposed the extraordinary package of measures Draghi used to hold the euro together during the debt crisis.
Or it could give leverage to Italy’s Matteo Salvini and his ally Marine Le Pen, a French Nationalist. They chafe against the constraints of monetary union and have at times raised questions about whether their countries should even stay in the euro.
Market pricing currently suggests that the slowing economy will prevent Draghi from raising rates at all before he goes, making the policy views of his successor all the more important.
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