26 May 2014
ECB's Draghi: Various easing measures could be adopted to counter prolonged low inflation
FXStreet (Łódź) - ECB head Mario Draghi, whose speech opened the Forum on Central Banking in Sintra, Portugal, assured that the Governing Council was closely watching inflationary developments in the Eurozone and was ready to act should disinflationary pressures rise, threatening the recovery in the area by delaying consumer and business spending.
The possible easing measures which could be adopted at the monetary policy next week to counter the risk of deflation include broad based asset purchases or interest rate cuts to new bank loans, Draghi signaled.
“The central bank isn't resigned to allowing excessively low inflation for too long,” he stressed. “We must be particularly watchful for a negative inflationary spiral.”
As Ryan Littlestone comments on ForexLive: “Well I guess we have the low down on which way the ECB is going to act. From that comment it sounds like we could well be getting a dose of QE. The market might take that as the ECB ruling out rate cuts or at least a negative deposit rate.”
The euro was little moved following Draghi's remarks, sliding 10 pips to 1.3635.
The possible easing measures which could be adopted at the monetary policy next week to counter the risk of deflation include broad based asset purchases or interest rate cuts to new bank loans, Draghi signaled.
“The central bank isn't resigned to allowing excessively low inflation for too long,” he stressed. “We must be particularly watchful for a negative inflationary spiral.”
As Ryan Littlestone comments on ForexLive: “Well I guess we have the low down on which way the ECB is going to act. From that comment it sounds like we could well be getting a dose of QE. The market might take that as the ECB ruling out rate cuts or at least a negative deposit rate.”
The euro was little moved following Draghi's remarks, sliding 10 pips to 1.3635.