UPDATE 1-German conservative criticises Draghi's "alarming" policy comments

A senior lawmaker from Chancellor Angela Merkel's conservative bloc on Wednesday accused ECB President Mario Draghi of sending an "alarming" signal about future eurozone monetary policy, essentially tying his successor's hands.

Draghi said on Tuesday the European Central Bank would ease policy again if inflation failed to accelerate, saying fresh bond purchases, rate cuts or changes to the ECB's policy guidance had all been "raised and discussed" when rate-setters met less than two weeks ago. The message depressed the euro and bond yields.

"The apparently uncoordinated comments from ECB President Draghi on further monetary policy measures are an alarming signal for the European Central Bank's integrity," said Hans Michelbach, spokesman for Merkel's conservative CDU/CSU bloc in the Bundestag lower house of parliament's finance committee. "Draghi's unilateral course also seems to be an attempt by the ECB President to send signals for the time after his term that would be difficult to correct by a successor. This move is more than questionable."

The Italian is due to step down at the end of October. Frequent challenges to the ECB's ultra-easy monetary policy have also come from the head of Germany's Bundesbank, Jens Weidmann, a monetary policy hawk who sits on the ECB's governing council.

A Finance Ministry spokesman declined to comment on Draghi's comments, made in a speech at an ECB conference in Sintra. Michelbach, an outspoken critic of the ECB's loose monetary policy, said Draghi had not achieved his self-imposed goal but was already out of ammunition needed to deal with a new crisis.

"And now he wants to continue the wrong course in the face of slowing growth dynamics, which is largely determined by the U.S. trade dispute," Michelbach said, adding that the ECB's record low-interest rates had created significant default risks. Otto Fricke, an opposition lawmaker from the business-friendly Free Democrats (FDP), said of Draghi's comments: "Either the economic situation in the eurozone is so fragile and endangered that Draghi had to make these far-reaching statements in the short term... Or he has only his legacy in mind." 

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