Draghi’s speech: Further cuts in policy interest rates remain part of our tools, EUR/USD drops to 1.1200
|The European Central Bank (ECB) President Draghi’s speech is on the wires now, via Reuters, delivering a scheduled introductory speech on the second day of the ECB Forum on Central banking in Sintra, Portugal.
Key Headlines:
Monetary policy can always achieve its objective alone, but especially in Europe where public sectors are large, it can do so faster and with fewer side effects if fiscal policies are aligned.
If we are to deliver that value of inflation in the medium term, inflation has to be above that level at some time in the future.
APP still has considerable headroom.
The limits we establish on our tools are specific to the contingencies we face.
We will use all the flexibility within our mandate to fulfil our mandate.
And we will do so again to answer any challenges to price stability in the future.
Symmetry means not only that we would not accept persistently low inflation, but also that there was no cap on inflation at 2%.
All these options were raised and discussed at our last meeting.
Further cuts in policy interest rates and mitigating measures to contain any side effects remain part of our tools.
We remain able to enhance our forward guidance by adjusting its bias and its conditionality to account for variations in the adjustment path of inflation.
In the coming weeks, the governing council will deliberate how our instruments can be adapted commensurate to the severity of the risk to price stability.
Negative rates have proven to be a very important tool in the euro area.
In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required.
Indicators for the coming quarters point to lingering softness.
ECJ emphasized the broad discretion of the ECB in using all our tools in a necessary and proportionate way to achieve our objective.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.