Mario Draghi reportedly celebrated his 70th birthday away from Frankfurt last weekend, and with good reason. Germany’s financial capital was the site of the largest evacuation in post-war German history as disposal experts defused a massive World War II-era bomb discovered at a building site.
An appropriate metaphor perhaps, particularly for German policymakers, who fear that the ECB president is sitting on a ticking time bomb in the form of trillions or euros in cash injected into the euro zone’s economy. Over the coming year, Mr. Draghi will have to defuse that bomb by carefully weaning the economy off the stimulus the ECB has been providing for nearly three years.
It’s a delicate process, and one that could lead to some sharp disagreements among the ECB’s governing council members when they hold their latest rate-setting meeting Thursday in Frankfurt. But while sparks may fly, most economists don’t expect the council to make any decisions on how to actually proceed until next month.
There’s good reason to wait on how to proceed. The biggest reason: It could halt a record rise in the value of the euro.