ECB Draghi’s QE Comments Drop EUR

January 5, 2015 Share Print 0

The value of the euro has fallen to its lowest level since the middle of 2010, following comments from Mario Draghi, the president of the European Central Bank (ECB).

In a newspaper interview, he hinted again that the bank might soon start a policy of quantitative easing to try to stimulate the eurozone economies.

The aim would be to stop the continued fall in the general level of prices.

The euro fell 0.4% to $1.2034 after Mr Draghi’s comments were made public.

Recently, the official eurozone inflation rate has fallen to just 0.3%.

‘Making preparations’
To stop deflation – falling prices – gaining a grip on the world’s largest trading bloc, the ECB could launch its own programme of quantitative easing (QE) by buying government bonds, thus copying its counterparts in the UK and the US.

The purpose would be to inject cash into the banking system, stimulate the economy and push prices higher.

Speaking in an interview with the German newspaper Handelsblatt, Mr Draghi said: “We are making technical preparations to alter the size, pace and composition of our measures in early 2015.”

via BBC

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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.