Markets Incorrectly Interpreted Draghi Comments

European Central Bank President Mario Draghi intended to signal tolerance for a period of weaker inflation, not an imminent policy tightening, when his comments sent the euro higher this week, sources familiar with Draghi’s thinking said on Wednesday.

The ECB declined to comment.

Draghi’s comments on Tuesday, taken as a hawkish swing, sent the euro and bond yields sharply higher.

The sources said Draghi wanted to acknowledge the recent, strong economic data and prepare the market for an autumn decision on the future of the ECB’s 2.3 trillion euros bond-buying programme but without making any commitment.

Reuters

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.