Doom and gloom for the ECB: Euro Bank chief issues woeful update on eurozone economy

Thursday, July 20, 2017
By Paul Martin

THE eurozone economy is under performing in key areas and still needs huge levels of monetary support, the European Central Bank president warned during a downbeat update.

Thu, Jul 20, 2017

Mario Draghi reiterated concerns that inflation remains low, as he poured water over hopes that policymakers would soon scale back the bloc’s huge money-printing programme.

Price rises fell back in June and have showed little sign of picking up any time soon, said Mr Draghi.

The top central bank warned toning down the ECB’s extreme support measures too soon could damage the eurozone’s recovery.

He urged markets to remain patient, despite signs that growth is picking up in the bloc.

Mr Draghi told a press conference: “We’re not there yet.

“Inflation is not where we want it to be and where it should be.

“A very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up.”

Mr Draghi’s update appeared to row back from recent comments that had talked up the eurozone economy.

However, the euro strengthened after the update, rising against both the pound and the euro.

Investors shrugged off Mr Draghi’s downbeat tone, and appear to think the ECB could announce plans to scale down the money-printing programme in the next couple of months.

Joshua Mahony market analyst at IG, said: “It seems Mario Draghi lost some of his shine today, with markets largely ignoring the fact that the ECB governor failed to mention tapering, instead driving the euro higher despite his attempt to drive home a dovish tone.

“Draghi’s choice to state that the ECB remain willing to raise QE if necessary was largely disregarded, for we all know that given the current rate of economic improvement, it is only a matter of time until Draghi changes his tone.”

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