Sunday 17 December 2017

New Euro bank boss may be bad for Irish borrowers

Mario Draghi
Mario Draghi reporters

EU leaders have appointed Italian economist and banker Mario Draghi as the next president of the European Central Bank at the EU summit.

Draghi is considered a "hawk" when it comes to fighting inflation which could prove a concern for Irish mortgage holders - especially those with trackers.

Fighting inflation is the core remit of the ECB and it aim is to keep it as close to 2pc as possible.

European inflation is currently running at 2.7pc and a rate increase is already widely expected early next month.

But Draghi is considered one of the more agressive fighters of high price on the ECB board.

Draghi's apppointment comes despite concern from France in recent weeks about Draghi's appointement because Italy with end up with two members on the ECB's executive board.

In April, Italian Prime Minister Silvio Berlusconi promised French President Nicolas Sarkozy that Italy would yield Bini Smaghi's place on the ECB board to a French candidate, in return for France's backing of Draghi for president.

But he did so without consulting Bini Smaghi, who is not set to step down for another two years.

It is still unclear how the issue will be resolved.

Draghi won widespread backing for his candidacy in recent months but there were also earlier concerns that his past job as a banker with Goldman Sachs might inhibit his appointment.

Mr Draghi has made clear that his role at Goldman Sachs between 2002 and 2005 did not involve selling financial instruments but was largely an advisory position.

He has also highlighted his presence on Europe's Financial Stability Board, his concerns about the failure to tackle Greece's debt crisis and his agreement with current boss Jean Claude Trichet on monetary policy.

He will replace Mr Trichet when he steps down at the end of October after eight years in situ.

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