Mario Draghi has laid out the case for the European Central Bank’s aggressive monetary easing to a highly sceptical Dutch parliament on Wednesday.
Along with Germany, the Netherlands’ economic and political establishment has been among the fiercest critics of ECB quantitative easing, where the central bank is buying around €60bn-worth of mostly government bonds each month.
Mr Draghi said he was aware of the parliament’s concerns but said the negative side effects of the policy had so far been limited.
“We are monitoring these various effects carefully, taking into account our price stability mandate,” the ECB president said in the Tweede Kamer.
“Against the backdrop of a recovery that is becoming increasingly solid, the benefits of our policy clearly outweigh potential side effects.”
Referring to research published by the ECB on Wednesday, which showed as much as 18 per cent of the eurozone’s working-age population were either unemployed or underemployed, Mr Draghi said:
The labour market slack that is there is big. Obviously it has improved a lot, but it’s still present.
We are confident that we should see signs of an increase in nominal wages relatively soon.
Nominal wage movements are the strongest factor to show that increases in inflation will be durable.