Praet Says ECB Can Recalibrate Stimulus Again If Shocks Arise

The European Central Bank can boost the scale of its support to the euro-area economy yet further in the event that fresh risks to the outlook arise, Executive Board member Peter Praet said.

“If further adverse shocks were to materialize, our measures could be recalibrated once more, commensurate with the strength of the headwind, also taking into account possible side-effects,” Praet said according to the text of a speech delivered in Frankfurt on Thursday. Not including the impact of the March 2016 quantitative-easing boost, “relative to the counterfactual scenario, our measures have provided significant support to output and inflation,” he said.

Since the Frankfurt-based ECB last month cut rates to record lows and added corporate debt to the range of assets in its bond-buying program, Praet has repeatedly underlined that the central bank hasn’t run out of room to ease again. That pledge comes against a backdrop of increasing unease in financial markets over the use of negative interest rates and a dearth of evidence that too-low inflation is responding to stimulus.


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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.