And frankly, for us to act in that way would be totally illegitimate as unelected central bankers. It doesn’t work empirically either. There’s not necessarily any connection between interest rates and reforms. For example, Spain started its labour market reforms when interest rates had already gone down. Italy passed a labour market reform last year in tranquil market conditions.
Likewise, France is pursuing the Macron reforms with no market pressure. And the argument doesn’t work logically. Think about the types of reforms that euro area countries really need – reforms to judicial systems, to education, to public administration. Such reforms are difficult and can take a decade to bear fruit. Enacting them takes personal conviction from politicians and a popular mandate for change.