FRANKFURT, Germany – For the European Central Bank and its president, Mario Draghi, Donald Trump's unexpected election victory has complicated an impending day of decision on whether to expand monetary stimulus efforts.
The ECB has so far avoided giving a clear signal on the future of its 1.74 trillion euro ($1.9 trillion) bond-buying program, which pumps 80 billion euros in newly created money into the economy every month in an attempt to spur growth and inflation.
With the program's earliest end date set for March, and the bank's next meeting on Dec. 8, the time is approaching for the ECB to indicate whether it will keep the money spigot open or slowly start closing it by reducing, or tapering, the purchases.
On one reading, Trump's election win introduces uncertainty about what he will do when he becomes U.S. president on Jan. 20 — and that could argue for more stimulus. Some analysts think the ECB will decide on at least a six-month extension.
Yet the market reaction to Trump's victory has been mostly upbeat so far. Some of Trump's ideas, such as spending $1 trillion on tunnels, bridges, roads and ports, and removing some financial regulations, could boost growth. Such prospects — uncertain as they are — have already lifted stock prices for companies that would benefit, such as construction equipment maker Caterpillar.
And if the idea of infrastructure spending catches on in Europe, it could help the economy there too, particularly in the 19-country eurozone. Since the global financial crisis, the monetary union has focused largely on cutting spending. That helps reduce debt, but also puts a brake on economic growth.
Members of the euro face rules restricting debt and deficits, but the will to enforce the rules seems to have weakened even before the U.S. election, with the European Commission giving Portugal, for example, more time to bring its deficit into compliance.
The ECB's stimulus has wide-ranging implications for investors, savers and companies. Ultra-low interest rates — one product of the stimulus — have reduced returns on savings, pushed investors into riskier markets like stocks and real estate, and increased pressure on pension programs. Low rates have also weakened the earnings of banks, making some more hesitant to issue loans, which are vital to economic growth.
The ECB's decision was already complicated by having to weigh the benefits of more stimulus against those side effects.
Benoit Coeure, a member of the ECB's six-member executive board, was quoted Friday in interviews with French newspapers as saying it's "too early to say" if Trump's victory will affect the Dec. 8 decision.
Economists Joerg Kraemer and Marco Wagner at Commerzbank are among those who think the ECB will be under pressure to extend the stimulus.
Their reasoning: more and more voters in Europe, too, are turning against the political establishment. "In this environment, it will become increasingly difficult (for governments) to push through unpopular reforms which are inevitable in order that the economic and monetary union economy recovers and for the continued existence of the monetary union."
That means the ECB will be left with the burden of helping the economy through its stimulus programs and low rates, the two wrote in a research note.
Others, like Ben May, an economist at Oxford Economics, argue that a steady improvement in the eurozone economy could lead the ECB to announce a tapering of its stimulus program, or to put off its decision for a month. The number of unemployed is steadily falling. Inflation has crept up to 0.5 percent in October, far from the ECB's goal of just under 2 percent, but better than the negative readings as recently as May.
The calendar of political events, however, suggests the euro currency union could be in for more shocks.
— A referendum on constitutional changes in Italy on Dec. 4 — four days before the ECB decision — could, if rejected, topple the government. New elections could boost the Five Star Movement, which has called for a referendum on euro membership.
— A repeat runoff election for president of Austria on the same day could bring right-wing populist Norbert Hofer of the Freedom Party into office.
— British Prime Minister Theresa May wants to start by the end of March the official talks to bring the country out of the European Union. Britain is not in the euro, but is a major trade partner, and the talks on its exit could shake business confidence.
— Elections March 17 in the Netherlands could see the Party for Freedom of Geert Wilders as the largest party, polls suggest. Wilders tweeted congratulations to Trump on his "historic" victory.
— In France, two rounds of voting for president in April and May could see National Front leader Marine Le Pen make the second round. The National Front wants to leave the European Union and restrict immigration.
All that uncertainty could depress business activity as people await the outcome of the votes, says IHS Global Insight economist Howard Archer.
His view is that the ECB will next month extend its bond-buying stimulus program by six months at the current rate of 80 billion euros a month. "It makes an already uncertain political landscape for the eurozone in 2017 look even more uncertain...that could lead to increasing business caution and make growth that little bit more difficult."