ECB Urges Prudence

The European Union is experiencing a newfound confidence that could unlock demand and investment, ECB president Mario Draghi said Tuesday, while insisting on “prudence” in any monetary adjustments, AFP reported. Speaking at a central bank forum in the Portuguese resort town of Sintra, Draghi said that for years uncertainty over whether the eurozone would seriously reform labor markets had acted as a brake on investments and confidence. Britain’s decision to quit the EU also shook the bloc, which came under assault from anti-European sentiment. “Today, things have changed. Political winds are becoming tailwinds. There is newfound confidence in the reform process, and newfound support for European cohesion, which could help unleash pent-up demand and investment,” he told the annual forum organized by the ECB. Despite the optimism, Draghi cautioned against a change in the eurozone’s expansionary monetary policy stance. While the risk of deflation has disappeared, “inflation dynamics are not yet durable and self-sustaining. So our monetary policy needs to be persistent,” he said.