Despite eurozone’s steadily improving economic conditions, inflation continues to be subdued and still needs substantial central bank stimulus, European Central Bank President Mario Draghi said, adjusting expectations for the outcome of the bank’s June 8 policy meeting.
The top ECB official signaled that the bank is not prepared to taper down its ultra loose and massive monetary stimulus, dismissing increasing pressure on the central bank to outline a new policy path as the eurozone economy shows signs of picking up, with inflation rising and political risks dissipating.
But Draghi noted wage growth continued to be modest and underlying inflation remained weak and argued that the aggressive bond purchases and sub-zero rates were still needed to push back inflation towards the bank’s 2 percent target.
Eurozone’s economy outpace the U.S. during Q1, while its unemployment rate has fallen to 9.5 percent, its lowest level in eight years. Inflation has jumped from below zero to 1.9 percent, within the ECB’s target rate.
Addressing the European Parliament in Brussels, the ECB president acknowledged that the zone’s economic recovery was gaining momentum and was spreading across the region. However, he cautioned that underlying inflation was still too weak to prompt any shift in policy. He added that it is still too early to consider shifting their monetary policy stance.
The central bank’s rate setting committee will assess its policy once more during its June 7-8 meeting in Estonia.
The material has been provided by InstaForex Company – www.instaforex.com
May 30, 2017 at 08:04AM
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