ECB’s Panetta: Still a long way from the neutral rate

Dhwani Mehta FXStreet

European Central Bank (ECB) executive board member Fabio Panetta said on Tuesday that the central bank is “still a long way from the neutral rate.”

Additional comments

If domestic demand remains weak, inflation could fall well below 2%.

The ECB should move to neutral monetary policy stance, or even expansionary if necessary.

Eurozone economic activity remains weak, no turning point in sight for beleaguered manufacturing sector.

The tightening bias in our official description of the monetary stance is no longer necessary.

The ECB should return to more traditional, forward looking approach to monetary policy.

Directional guidance from the ECB would help consumption and investment.

The ECB needs to give more explicit indications of its rate policy intentions.

Market reaction

EUR/USD was last seen trading at 1.0566, losing 0.31% on the day.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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