The European Central Bank’s accommodative monetary policy should be increasingly felt throughout the euro-region economy as disruptions in the financial system wane, President Mario Draghi said.
“As policies to reverse fragmentation accelerate, and bank deleveraging and restructuring proceeds, monetary policy should become increasingly effective,” Draghi said in a speech in Paris today. “I expect monetary policy to regain influence over the economic cycle, and our accommodative stance to support a gradual closing of the output gap in the coming years.”
Draghi’s optimism on the region’s rebound is buttressed by output data and measures of business confidence as the impact of economic reforms and the ECB’s record-low interest rates support the recovery in the 18-nation euro area. Still, the ECB president warned that risks including subdued prices and a strengthening euro remain.
“If any downside risks to this scenario appear, we stand ready to take additional monetary policy measures that ensure our mandate is fulfilled,” Draghi said. “In other words, we will do what is needed to maintain price stability,” he said, adding that “right now, we think that the risks of having deflation are limited.”
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.