10 Apr 2014
ECB's Praet says Governing Council 'comfortable' with forward guidance
FXStreet (Łódź) - ECB Chief Economist Peter Praet said Thursday that the central bank hadn't changed its assessment that interest rates should remain at their present or lower levels for an extended period.
Speaking on the sidelines of the IMF-World Bank Spring meetings, Praet assured that the forward guidance was having a positive impact on money markets, as their reaction to external developments “has been much more insulated." Markets trust the ECB to do what's needed in the face of low inflation, he stressed.
Furthermore, ECB's chief economist said that a high degree of slack remained in the Eurozone economy. He pointed out that the recovery in the area remained "modest, uneven" and "increasingly broad-based."
He also acknowledged the fact that while confidence indicators picked up considerably, activity hasn't and that should be carefully monitored. He added that the output gap "is unlikely to be closed before 2017 for the euro area as a whole."
“EUR/USD has hardly reacted to the comments or the earlier US data as it consolidates in the 1.3860/70 zone,” remarks Adam Button from Forex Live. “There’s nothing in his comments that suggests the ECB is any close to cutting rates or QE. That’s a greenlight for buying the euro and the market doesn’t seem to care about the softer-than-expected French CPI numbers released today.”
Speaking on the sidelines of the IMF-World Bank Spring meetings, Praet assured that the forward guidance was having a positive impact on money markets, as their reaction to external developments “has been much more insulated." Markets trust the ECB to do what's needed in the face of low inflation, he stressed.
Furthermore, ECB's chief economist said that a high degree of slack remained in the Eurozone economy. He pointed out that the recovery in the area remained "modest, uneven" and "increasingly broad-based."
He also acknowledged the fact that while confidence indicators picked up considerably, activity hasn't and that should be carefully monitored. He added that the output gap "is unlikely to be closed before 2017 for the euro area as a whole."
“EUR/USD has hardly reacted to the comments or the earlier US data as it consolidates in the 1.3860/70 zone,” remarks Adam Button from Forex Live. “There’s nothing in his comments that suggests the ECB is any close to cutting rates or QE. That’s a greenlight for buying the euro and the market doesn’t seem to care about the softer-than-expected French CPI numbers released today.”