Draghi credibility at stake as ECB tries to save the euro
European Central Bank President Mario Draghi faces the most decisive moment of his presidency today when he tries to heal divisions among policy-makers and deliver on his promise to save the euro.
Draghi pledged more than a month ago to do what’s needed to preserve the single currency; now he’s under pressure to follow through with details of a bond-purchase plan to lower borrowing costs in Spain and Italy and prevent a breakup of Europe’s monetary union. Draghi has put his credibility squarely on the line as he has made it his business to save the euro. He advised the European Parliament that the ECB needs to intervene in bond markets to wrest back control of interest rates in a fragmented euro-area economy and save the currency. His blueprint, sent to council members just two days ago and opposed by Germany’s Bundesbank, proposes unlimited buying of government debt with maturities of up to about three years.
Draghi will hold a press conference at 2:30 p.m., 45 minutes after the ECB announces its interest-rate decision. The expectation of ECB bond buying has strengthened the euro against sterling. GBP /EUR is currently trading at 1.2590-1.2650.
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