Draghi’s Unexpected Independence

Mario Draghi’s reputation as an inflation hawk took a back seat to his other reputation for being his own man when at his first meeting as head of the European Central Bank he surprised markets by cutting the central bank’s benchmark interest rate by a quarter of a percentage point to 1.25%. It would be too harsh to represent this as a slap in the face of his predecessor, Jean-Claude Trichet, who was criticized for raising rates, in the German interest, as it was taken to be, during a time of credit crisis, but Draghi’s reversal is a welcome sign of what will be a continuing need for independence especially in the face of the euro-zone leadership’s continuing inability to get a grip on its debt crisis. His diplomatic skills can mask the extent to which he is self-confident about following his chosen course, but as Europe politicians may find, being Jesuit-educated, Draghi will know how to make their minds follow.

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Filed under Credit Crisis, Monetary Policy

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