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.

Bloomberg

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Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam