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Draghi Jackson Hole Speech Marks Turning Point in Rhetoric: Barc 2014-08-24 20:15:49.477 GMT
By Madeleine Lim Aug. 24 (Bloomberg) -- Draghi emphasis on need for stimulus both on supply and demand side probably marks first time ECB president has argued for boost to aggregate demand, Barclays economist Philippe Gudin wrote in note. * Major breakthrough with 1st time reference to “overall fiscal stance of euro area,” implicit recognition that some countries, particularly Germany, could run expansionary policy * Draghi sided with France, Italy, which have argued for more flexibility rather than Germany * Favors euro area budget for large public investment program * Explicit mention of medium-term inflation expectations, in part. 5y5y inflation swap rate below 2%, as cause of concern for ECB signals potential for more near-term action * Chances for outright QE as next step have increased, though still not expected before year-end
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To contact the reporter on this story: Madeleine Lim in New York at +1-212-617-2296 or mlim131@bloomberg.net To contact the editor responsible for this story: Madeleine Lim at +1-212-617-2296 or mlim131@bloomberg.net