ECB’s Draghi Says Price Growth Will Take Longer Than Expected

Risks to Europe’s inflation and growth outlook have increased due to the emerging market slowdown but the European Central Bank needs more time before deciding on further stimulus, ECB President Mario Draghi said on Wednesday.

Draghi said price growth will take longer than previously expected to rise back to the ECB’s near 2 percent target and that the euro zone’s central bank is ready to beef up its 1 trillion euro plus asset buying program if needed.

But it needs more evidence to conclude whether China’s slowdown, the euro’s rise and falling oil prices will divert inflation from its projected path.

Draghi’s relatively hawkish comments confounded some market expectations that the ECB was close to expanding its asset buys and sent the euro slightly stronger.

“The asset purchase program has sufficient in-built flexibility,” Draghi told the European Parliament’s Committee on Economic and Monetary Affairs. “We will adjust its size, composition and duration as appropriate, if more monetary policy impulse should become necessary.”

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