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ECB ready to take action against low inflation and strong Euro, says Dragui

Saturday, May 10th 2014 - 00:13 UTC
Full article 2 comments
Dragui: “The governing council is comfortable with acting next time” Dragui: “The governing council is comfortable with acting next time”

The European Central Bank is ready to take action next month to boost the Euro zone economy if updated inflation forecasts merit it, said ECB president Mario Dragui warning outsiders not to pressure the bank into action.

 Stressing that the euro's strength was “a serious concern”, the ECB chief Mario Draghi said the exchange rate would have to be addressed, adding that the bank's policymakers held a discussion about “all instruments” at their meeting in Brussels.

Euro zone inflation ticked up to 0.7% in April from March's 0.5%, but remains far below the ECB's target of just under 2%, and Draghi said: “There is consensus about being dissatisfied with the projected path of inflation.”

“The governing council is comfortable with acting next time but before we want to see the staff projections that will come out in early June,” he told a news conference after the ECB left interest rates on hold, as expected.

Draghi did not specify what policy action the ECB could take beyond saying Thursday's council discussion touched on the policy instruments the central bank has mentioned previously.

These have included interest rate cuts, liquidity measures and even quantitative easing - central-bank speak for money printing to buy assets, a policy already pursued by the U.S. Federal Reserve, the Bank of Japan and the Bank of England.

The ECB governing council met in Brussels against the backdrop of a Franco-German spat over ECB policy regarding the strength of the Euro, one factor Draghi has identified as a potential trigger for policy action.

“The strengthening of the Euro in the context of low inflation and still low levels of economic activity, is a cause for serious concern in the view of the Governing Council,” he said.

But Draghi pushed back against the countries - led by France - and institutions that have been urging the ECB to take action to boost the economy and counter low inflation.

“We have received plenty of advice,” he said. “We are independent, so people should be aware that if this might be seen as a threat to our independence it could cause long-term damage to our credibility.”

Categories: Economy, Politics, International.

Top Comments

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  • reality check


    No chance of a loan I suppose.


    May 10th, 2014 - 12:25 am 0
  • Briton

    ECB ready to take action ,
    they have been ready every time they sit on the Euro loo,
    but nothing ever happens,
    piles we believe- piles and piles of bull

    May 10th, 2014 - 07:56 pm 0
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