European Central Bank President Mario Draghi's Taper Test
European Central Bank President Mario Draghi was hit with an unprecedented one-two punch of German pressure Wednesday as the country's top banker and its venerable finance minister called for an end to ultra-low interest rates just a few miles down the road from the Bank's headquarters in Frankfurt.
However, with the euro stuck at a near two-and-a-half year high against a slumping U.S. dollar and the likelihood of softer inflation projections, neither gentleman is likely to be satisfied by Draghi's counter-punch reply in the sweet science of monetary policy.
Wolfgang Schaeuble, the country's plain-speaking finance minister and Chancellor Angela Merkel's staunchest ally, struck first by telling an audience of bankers and businessmen in Frankfurt that it was time to "normalise" ECB policy. The call comes as Draghi and his colleagues start their regular two-day policy meeting in the central German city that some have argued should signal the end to its two-year, €2.3 trillion program of quantitative easing and negative interest rates.
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