ECB: QE continues, euro a concern
European Central Bank (ECB) president Mario Draghi said that policy makers were monitoring the euro’s gains as they considered the future of their quantitative easing (QE) program. Decisions, he said, would likely be forthcoming next month. Speaking to reporters in Frankfurt yesterday, Mr. Draghi said: “The recent volatility in the exchange rate represents a source of uncertainty which requires monitoring with regard to its possible implications for the medium-term outlook for price stability.”
Mr. Draghi also offered a comment on the ECB’s behind-closed-doors conversation over quantitative easing. He said that decisions are “many, complex, and always naturally one thinks about risks that may materialize in the coming weeks or months, so that is the caution behind not specifying a date. Probably the bulk of these decisions will be taken in October.”
The euro has surged against the dollar this year by more than 14% - it moved up a further 1.2% during Draghi’s speech – and that has resulted in a downgrade of the ECB’s inflation outlook. This is troublesome as it pushed the ECB’s target of 2% inflation further away. At present, the bank sees inflation of 1.2% in 2018 and 1.5% in 2019. The ECB’s QE program, meanwhile, continues apace: having already topped €2 trillion, the central bank will continue pushing €60 billion a month into the euro zone until the end of the year.
Nonetheless, Mr. Draghi said that there was a “broad satisfaction” within the governing council that consumer prices were looking to converge with expectations for stronger growth. He said:
“Financial conditions have unquestionably tightened in the euro area, but they remain broadly supportive of the non-financial companies and enterprises. The economic expansion, which accelerated more than expected in the first half of 2017, continues to be solid and broad-based across countries and sectors.”
The opinions in this article do not reflect those of Dominion Fund Management Limited, and in the instance of any forward-looking statements, these should not be construed as advice.
If you would you like to receive the Newsfeeds daily, please click here to sign up now!Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
- Click here to print this story: Print
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.