European Central Bank President Mario Draghi said policy makers are ready to add to stimulus if the outlook for prices deteriorates, though there are currently no signs of deflation in the euro area.
“We don’t have any evidence of people postponing their expenditure plans with a view to buying the same thing at lower prices, in other words we don’t see what is defined to be deflation,” Draghi said after a Group of 20 meeting in Sydney yesterday. “We are aware of the risks. The Governing Council is willing and ready to take any action in case these risks were to gain strength.”
Economists are divided over whether the Frankfurt-based ECB will increase stimulus to counter the risk of deflation after euro-area inflation slowed to 0.7 percent in January, less than half the bank’s 2 percent target. Draghi said the council will have “the full set of information needed for deciding whether to act or not” by its next policy meeting on March 6 in Frankfurt, when it will publish a 2016 inflation projection for the first time.
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