Draghi calls for global policy alignment

Bloomberg

European Central Bank President Mario Draghi avoided mentioning the UK’s vote to leave the European Union and called for greater alignment of policies globally to mitigate the spillover risks from ultra-loose monetary measures.
“We can benefit from alignment of policies,” Draghi said at the ECB Forum in Sintra,
Portugal.
“What I mean by alignment is a shared diagnosis of the root causes of the challenges that affect us all; and a shared commitment to found our domestic policies on that diagnosis.”
Central banks’ extraordinary measures to boost inflation since the global financial crisis have depressed interest rates, stoking discontent among savers and drawing accusations that they have helped boost the support for populist parties. Draghi, who has often criticised euro-area governments for inadequate structural reforms, said there is a “common responsibility” to address the sources of low inflation, such as low productivity and an output gap.
In his speech, Draghi didn’t explicitly refer to the latest blow to the global economy — the UK’s shock vote to exit the EU — after he said that the best word to describe his sentiment in reaction to the British
referendum probably was
“sadness.”
Draghi and other policy makers are scrambling to contain the fallout as markets slump and political uncertainty rises. He will travel to Brussels on Tuesday to join a meeting of EU leaders. ECB Executive Board members Benoit Coeure and Peter Praet are scheduled to chair panel discussions at the ECB Forum, a European equivalent of the US Federal Reserve’s Jackson Hole symposium.
A panel discussion between Draghi, Bank of England Governor Mark Carney and US Federal Reserve Chair Janet Yellen that was planned for the final day has been canceled.
“We have to think not just about the composition of policies within our jurisdictions, but about the global composition that can maximize the effects of monetary policy so that our respective mandates can best be delivered without
overburdening further monetary policy,” Draghi said.
“This is not a preference or a choice. It is simply the new
reality we face.”