EU CRISIS: Euro SINKS as European Central Bank set to admit its policies are FAILING
THE euro has tumbled amid expectations the European Central Bank will tomorrow be forced to admit its policies are still failing to produce satisfactory results in Europe’s economy.
By LANA CLEMENTS
Express.co.uk
Wed, Jun 7, 2017
Monetary policymakers last year resorted to unprecedented extreme measures in a desperate effort to boost growth and inflation across the eurozone.
The ECB slashed interest rates below zero and unveiled a staggeringly large money-printing programme, which sees billions of euros injected into the bloc each month.
But in a major setback, the ECB is tomorrow set to revise inflation forecasts for the eurozone down, according to reports.
The news promptly sent the euro tumbling against the dollar and the pound.
Markets had hoped small signs of growth in the region would be enough to persuade the central bank, led by Mario Draghi, to scale back the incredible measures.
German politicians have also been been pressurising the ECB to change tack.
But the disappointing outlook for inflation means policymakers are unlikely to consider backing down over the money-printing programme and even less likely to raise interest rates.
Policymakers are expected to predict inflation will be at a sluggish 1.5 per cent over the next three years.
Low inflation can be seen as a sign of weak consumer demand and ailing economy.
Alexandra Russell-Oliver, currency markets analyst at Caxton, said: “Sterling-euro is back above 1.15 after jumping around 0.5 per cent on reports that the ECB will cut its inflation projections at this week’s meeting.
“This increases speculation that the ECB will strike a cautious tone on inflation tomorrow.
“The ECB is expected to keep policy unchanged, but traders will closely watch any adjustments to the language used in the Bank’s forward guidance.
“Such adjustments could weaken the euro, unless Draghi is less cautious than markets now expect.”
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