ECB Reaffirms Can Do More if Needed

European Central Bank policymakers stressed on Tuesday that they could still do more to support the euro zone economy after last week announcing a package of measures to ward off the threat of deflation.

The central bank chiefs of Finland and Slovakia, Erkki Liikanen and Jozef Makuch, who both sit on the ECB’s 24-member Governing Council, said the bank could do more if needed.

Last Thursday, the ECB cut interest rates to record lows, launched a series of measures to pump money into the sluggish euro zone economy, and pledged to do more if needed to fight off the risk of Japan-like deflation.

“This is not it yet,” Liikanen said at the Bank of Finland’s quarterly news conference when asked about remaining tools in the ECB’s kit. “We have the capacity to act, we can make decisions, this has not changed.”

In Frankfurt, German Finance Minister Wolfgang Schaeuble said the ECB’s policy measures were appropriate given low euro zone inflation, but added: “The ECB should stick no longer than necessary for price stability to their low interest rate policy.”

ECB President Mario Draghi said after announcing the package last week that “we aren’t finished here”, indicating that so-called quantitative easing (QE) – or money printing to buy assets – is on the table.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza