The Latest: ECB chief downplays idea of 'helicopter money'

AP News
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Posted: Apr 21, 2016 9:23 AM
The Latest: ECB chief downplays idea of 'helicopter money'

FRANKFURT, Germany (AP) — The Latest on the European Central Bank's policy meeting and news conference (all times local):

3:20 p.m.

The head of the European Central Bank is downplaying the idea of so-called "helicopter money" — drastic stimulus that involves creating money and handing it directly to people.

Mario Draghi said Thursday at a news conference after the bank left its stimulus programs and interest rates unchanged: "We have not discussed it."

He had in past weeks said the idea was interesting but faced significant legal and operational obstacles for the ECB.

The ECB is printing money but sending it into the economy through banks, not directly to people. The idea of "helicopter money" has gone down poorly in Germany, where some economists and legislators think the ECB has done too much stimulus.

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3:05 p.m.

The president of the European Central Bank is responding to criticism from some German politicians, who have complained that the bank's stimulus is penalizing the country's savers.

Mario Draghi said Thursday that the ECB's stimulus measures are aimed at doing what's right for the whole eurozone and raising its inflation rate from zero toward the bank's goal of just under 2 percent.

He told a news conference: "We have a mandate to pursue price stability for the whole of the eurozone's, not only for Germany."

Some German officials have complained that very low interest rates aimed at stimulating growth and inflation are hurting savers and retirement plans.

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3:00 p.m.

The euro has shot up to a nine-day high against the dollar after European Central Bank President Mario Draghi sounded a relatively optimistic tone over the state of the economic recovery in the 19-country eurozone.

Following the bank's decision Thursday to keep its monetary policy unchanged, Draghi said the ECB expects the economic recovery to proceed and to be supported by the recent stimulus measures. Financing conditions are improving, he said.

He also said the inflation rate in the eurozone will likely fall below zero in the coming months in light of current energy prices. However, he said inflation should start picking up in the second half of the year and continue rising in 2017 and 2018.

The ECB aims to have inflation just below 2 percent. In the year to March, inflation was flat.

Following his comments, the euro was up 0.7 percent at $1.1377.

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2:45 p.m.

European Central Bank head Mario Draghi says the eurozone's top monetary authority can deploy more stimulus if global troubles threaten to push a modest economic recovery off the rails.

Draghi said that if warranted to achieve the ECB's objective, it "will act by using all the instruments available within its mandate."

He made the remark after the bank decided to leave interest key interest rates at zero or below. The bank also did not increase its 80 billion euros per month in bond purchases with newly printed money, a step aimed at increasing inflation from zero. That is far below the bank's goal of just under 2 percent.