SINTRA, Portugal (Reuters) – Mario Draghi is seeing out the final weeks of his tenure in charge of the European Central Bank, but his overt hint of more stimulus to come could mean his influence is felt on ECB policy long after he has left the bank’s Frankfurt home.
Draghi leaves office at the end of October but a fresh round of stimulus in whatever form would set the direction of travel for much of the next year, thus making it difficult for a new ECB president to chart a new course even if they wanted to.
Draghi - Tuesday - ECB - Rates - Bond
Draghi said on Tuesday the ECB was prepared to cut rates or restart bond purchases in the absence of a clear improvement in the inflation outlook – complicated moves that are difficult to quickly undo without damaging the bank’s credibility.
Who will take over from Draghi is still part of a wider game of political musical chairs on the European level and subject to the usual horse-trading by national leaders.
Succession - Air - Draghi - Leeway - ECB-watchers
With the succession still up in the air, Draghi had the leeway to act, ECB-watchers and policy-makers acknowledge.
Fresh stimulus would protect the Draghi legacy at least for some time if a hawk like Germany’s Jens Weidmann, the Bundesbank president, takes over the ECB.
Life - Successor - France - Francois - Villeroy
It could also make life easier for a more centrist successor such France’s Francois Villeroy de Galhau or Finland’s Olli Rehn and Erkki Liikanen, because difficult decisions would then already be out of the way.
“He seems keen to protect his legacy and he wants to go out showing he’s done everything. He also wants to make it difficult to undo the ‘whatever it takes’ legacy,” one ECB policy-maker, who asked not to be named, told Reuters, referring to Draghi’s famous 2012 promise of unprecedented central bank support for the euro that brought the bloc back...
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