Krisztian Bocsi | Bloomberg | Getty Images
Mario Draghi, president of the European Central Bank (ECB), reacts during a news conference to announce the bank’s interest rate decision at the ECB headquarters in Frankfurt, Germany, on Thursday, Jan. 19, 2017.
Even as the euro zone has enjoyed 17 straight quarters of economic growth, wage growth has underperformed expectations, due in part to hidden slack in the labor market and low wage demands from unions.
Some policymakers also argue that globalization and technological changes have made value chains more international, making low inflation a global phenomenon and limiting central banks’ ability to control prices in their own jurisdiction.
Draghi acknowledged the debate but said the ECB was convinced the main problem was the labor market and even if there was a broader issue, it would not lead to policy change.
The ECB has kept interest rates in negative territory for years and already bought over 2 trillion euros worth of bonds to cut borrowing costs and induce household and corporate spending.
Draghi dismissed suggestions that low ECB rates may overinflate asset prices and argued that the few bubbles already observed, particularly in commercial real estate markets, should be fought with macroprudential tools and not monetary policy.
Still, he acknowledged that a disorderly correction in asset prices, particularly stocks, is among the chief risks for the global economy.