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2017-01-19 07:37:09
E.C.B., Facing Monetary Policy Complications Worldwide, Holds Firm

FRANKFURT — Plenty is happening in the world of monetary policy, so while the European Central Bank did not announce any major changes at its meeting on Thursday, there was no shortage of issues for members of its Governing Council to argue about.

The official inflation rate is rising, emboldening conservatives who want the bank to print less money. Britain will soon open divorce proceedings with the European Union. The American president-elect, Donald J. Trump, who predicted this week that more countries would defect from the bloc — undercutting the central bank’s raison d’être — will take office on Friday.

The European Central Bank has been a bastion of stability in the eurozone, equipped with powerful financial weapons and less susceptible to the political infighting that often paralyzes decision making at European Union headquarters in Brussels.

But holding the 19-nation currency bloc together may be trickier than ever in the months to come. Here are some of the issues facing the bank and the eurozone:

It has been said that the European Central Bank focuses on three things: inflation, inflation and inflation. That differs from the Federal Reserve in the United States, which also pays close attention to employment.

So a jump in the official eurozone inflation rate to 1.1 percent in December, the first time since 2013 that the Consumer Price Index has exceeded 1 percent, was a big deal in monetary policy circles.

The increase, from 0.6 percent in November, could have bolstered the argument by several members of the Governing Council that the central bank should begin backing away from the de facto money printing it has undertaken since 2015.

Mr. Draghi said, though, that members of the Governing Council were not yet convinced that the rise in prices would continue in months to come. “The council decided to look through it,” Mr. Draghi said of the inflation data — central bank jargon meaning that the members would not pay attention to the monthly number until they believed it signaled a trend.

He said there had been no discussion on Thursday about so-called tapering, or winding down the central bank’s purchases of government bonds and other assets using new money. Those purchases have been used in an effort to strengthen economic growth.

Mr. Draghi portrayed a harmonious meeting in which council members were unanimous in their belief that central bank policy was doing its job. “There was a sense of satisfaction toward the monetary policy stance we have been pursuing since 2015,” he said.

Britain moved a step closer to leaving the European Union this week after Theresa May, the country’s prime minister, gave a speech outlining her terms of separation. European leaders fear that Marine Le Pen’s far-right National Front has an outside shot at winning presidential elections in France this year, throwing the membership of one of the bloc’s core members into doubt just as another departs.

And Mr. Trump did not offer a ringing endorsement of the wavering European project when, speaking to two journalists this week, he complained about the Brussels bureaucracy he encountered while building a golf course in Ireland.

The European Central Bank is supposed to be aloof from politics. But the strains on European unity make it even more difficult than usual to develop a monetary policy.

Mr. Draghi refused to respond to Mr. Trump’s lack of faith in the common currency. “It’s very early for us to comment on President Trump’s statements,” Mr. Draghi said.

Some economists have expressed optimism that Mr. Trump could pursue policies that would increase growth in the United States, which would be good for the rest of the world and particularly Europe. The United States is the European Union’s biggest trading partner.

On the other hand, Mr. Trump also promised this week to slap 35 percent tariffs on BMW cars imported from a new factory in Mexico. Faster economic growth in the United States would be a mixed blessing for Germany and other European countries if it comes with restrictions on trade.

Mr. Trump’s policies could also increase inflation in the United States, leading to higher market interest rates. That would probably spread to European bonds and other assets, making it more expensive for regional governments and companies to borrow.

While refusing to respond to anything Mr. Trump has said, Mr. Draghi gave a relatively upbeat assessment of the eurozone economy. He pointed out that unemployment was falling, surveys of business and consumer confidence were at their highest levels in years, and he said it had become easier for businesses and consumers to get loans.

“The recovery is resilient,” Mr. Draghi said.