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Top banker pessimistic on European growth

“The economic recovery in the euro area is losing momentum,’’ said Mario Draghi, president of European Central BankYves Herman/Reuters

FRANKFURT — The president of the European Central Bank gave a more pessimistic view of the eurozone Monday than he did just a few weeks ago, in a statement that could encourage speculation that a stronger stimulus plan is in the works.

“The economic recovery in the euro area is losing momentum,” Mario Draghi told a committee of the European Parliament in Brussels.

That was a blunter and dimmer view than he gave at a news conference on Sept. 4, when he spoke of a “loss in cyclical growth momentum” but said it was still “consistent with a modest expansion.”

He dropped that note of optimism Monday. Instead, he said that the numbers over the summer were weaker than expected and “have given no indication that the sharp decline registered in August has stopped.”


Draghi’s words could nourish speculation that the central bank is edging closer to large-scale purchases of government bonds as a way of pumping money into the eurozone economy. Such “quantitative easing” could be considered at the next meeting of the central bank’s Governing Council, on Oct. 2.

Speculation was already rising that the central bank would take more steps to jolt the economy. Last week, fewer commercial banks than expected took advantage of cheap four-year loans offered by the central bank as a way of increasing the flow of credit. The program was a key part of the central bank’s plan to bolster its monetary stimulus by nearly $1.3 trillion.

Some analysts argue the central bank cannot meet its goal without resorting to large-scale purchases of government bonds, similar to those used by the Federal Reserve to help revive the US economy.

On Monday, Draghi did not give any explicit indication that quantitative easing was imminent. But he said the bank was “ready to use additional unconventional instruments within our mandate.”


Draghi played down the slack demand for the cheap loans, saying that banks may be waiting for a second round of the four-year loans, which will be offered in December.

Right now, commercial banks in the eurozone are under intense reviews of their health by the central bank, which Draghi acknowledged could temporarily discourage them from issuing credit.