Mario Draghi dragged the European Central Bank toward more monetary stimulus with a pledge to assess the need early next year, disappointing some investors seeking faster action.

Even as he unveiled “substantially” lower forecasts for euro-area inflation and economic growth, the ECB president said officials will wait to evaluate whether they’re doing enough to revive the weakest consumer-price growth in five years. They are already intensifying preparations for further measures, including studying the merits of buying government debt.

If policy makers do see a need to combat a prolonged period of low inflation then “this would imply altering early next year the size, pace and composition of our measures,” Draghi told reporters in Frankfurt after his Governing Council met to set policy for the last time in 2014. “We don’t need unanimity” on the 24-member council to act, he said.

David Fuller's view

I saw most of Mario Draghi’s press conference this morning and it reaffirmed that he is in a major battle with German officials over the ECB’s policy.  He is certainly not “too slow”, or “waffling” on QE, as a few commentators mistakenly claimed.  He feels Europe urgently needs QE, and I agree, although German monetary officials obviously do not. 

Europe has been living through precarious times, sadly, too often of the EU’s making.  Economic reforms are too slow to be encouraging and extremist previously fringe parties are gaining electoral support.  Mario Draghi’s efforts are Herculean, in my opinion, but he cannot do everything and faces plenty of opposition.  The Russian problem does not help. 

Europe’s economic policies are so restrictive that the region is being hollowed out as successful companies expand elsewhere.  Without some significant structural changes, the EU’s chances of surviving the next two years intact are diminishing.  This obviously creates risks but those can also be opportunities for patient value investors.  Europe’s successful multinational Autonomies have valuations which reflect the EU’s risks, but their development facilities and best markets are increasingly overseas.