The reasons for which the ECB will exit ultra-loose monetary policy measures

Bear in mind that the ECB began implementing unprecedented and unconventional monetary policy initiatives back in 2011, in a bid to curb the deflationary spiral, kicking things off in 2011 by offering banks long- term refinancing operations (LTROs) and later a massive quantitative easing (QE) program in 2015. These measures avoided triggering a vicious circle of deflation by significantly improving financing conditions for banks, corporations and governments alike.

Despite all these efforts, however, core inflation is still low, mainly due to slack on the labour market. Exceptional monetary measures are not enough, in and of themselves, to sustainably kick-start investment, a pre-requisite to ensuring a long-term recovery in growth. As Mario Draghi has thoroughly and consistently pointed out, governments also have a role to play in stimulating economic activity and employment.