Draghi cautions against hurried policy responses to new realities

Cautioning against rushed policy responses to the new economic realities, ECB President Mario Draghi called the unconventional monetary policy a success but stressed that gaps in understanding the comparatively new tools persist.

Draghi emphasized on the need for rigorous research. He suggested that central banks should carefully weigh up their policy steps, give up obsolete approaches and acknowledge gaps in their knowledge of how new tools work.

Quoting John Maynard Keynes, he said policymakers should change their minds when the facts change, and added that research could them decide whether a change in facts deserves a policy response.

Speaking on the topic, he said, “(John Maynard) Keynes is often quoted as saying, `When the facts change, I change my mind. What do you do, sir?' We must be aware of the gaps that still remain in our knowledge.”

ECB is worried over the current economic situation as its asset purchase program, aimed at boosting inflation, is going to expire at the end of 2017, requiring policymakers either to extend this program or scale it back.