FRANKFURT — European Central Bank head Mario Draghi says that stimulus measures including negative interest rates will have to stay in place longer if governments do not step up spending to help growth.
Draghi was quoted Monday by the Financial Times as saying: “Our policies will continue to work, albeit at a slower pace than if governments were spending more.”
Draghi said that “we have countries that have fiscal space and don’t use it.” He added that the 19 countries that use the euro need to set up a central spending capacity since individual governments tend to follow their own priorities and not those of the currency union.
Some governments including that of Germany, the biggest eurozone member, have resisted setting up a central fiscal fund and increasing deficit spending.
The Associated Press