Draghi points to untapped potential in euro area

Introductory speech by Mario Draghi, President of the ECB,

ECB Forum on Central Banking
Sintra, 22 May 2015

Some relevant excerpts

"Labour and product market rigidities contributed to a more painful adjustment process in the stressed economies, which was initially driven more by compression of demand than by a reduction of costs relative to other economies, albeit with differences across countries based on their initial degree of flexibility (Chart 1)... As a result, we now face a situation of significant divergence in unemployment across the euro area (Chart 2).This has direct implications for price stability: slow adjustment has contributed to the protracted disinflation we have witnessed since 2011 and to making inflation expectations more fragile.

Our Comments: Despite ECB's efforts, there are limits to monetary policy. Are we waiting eternally for reforms? 

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Source: European Central Bank Directorate General Communications 
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