According to the ECB’s new economic forecasts, released Thursday, inflation in the eurozone could reach 1.7 percent in 2020 — close to the central bank’s near 2 percent target that it has been trying in vain to reach since 2013. As other institutions such as the International Monetary Fund and the OECD did in recent weeks, the ECB also upped its forecast for GDP growth in the eurozone to 2.3 percent next year and 1.9 percent in 2019. [...]
But the ECB president, who has now entered the last two years of his mandate, could face in coming months the paradoxical situation of being criticized for pursuing policies that have succeeded — or are about to — to the point that his detractors want to stop them. [...]
But the hawkish wing of the governing council, led by German central bank chief Jens Weidmann, may seize on that as a proof that now is the time to get more aggressive in unwinding the loose-money policies with which Draghi has been associated ever since he took over in 2011. [...]
A major problem is that the ECB is running out of bonds to buy under the limits it set itself to avoid the type of “monetary financing” of governments banned by the eurozone’s founding treaty. To that effect, it cannot buy more than 33 percent of the debt of a given government — and never more than 33 percent of a specific bond issue.
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