Mario Draghi ‘unwilling passenger’ as soaring euro threatens to cripple zone’s economies

Thursday, September 7, 2017
By Paul Martin

THE strengthened euro is a concern for exports, inflation and the eurozone’s economy recovery, European Central Bank (ECB) president Mario Draghi admitted in a press conference, after interest rates were held and the Quantitative Easing (QE) programme maintained.

Thu, Sep 7, 2017

Concerns about the stronger eurozone currency had been expressed by most members of the bank’s policy council and also led to the downgrade in the inflation forecast, the ECB chief revealed in a press conference.

Mr Draghi said the next steps for the QE programme, which is set to run until the end of the year, will be discussed in the Autumn and markets can expect guidance after the October meeting.

The euro surged in response, rising to above 1.20 against the US dollar.

However, the chief policymaker noted the strengthened euro, and said the exchange rate is likely to hit exports and keep inflation below target for longer.

He told a press conference: “The exchange rate is not a policy target but it’s very important for growth and inflation.”

He added: “Recent exchange rate volatility represents a source of uncertainty which requires monitoring.

“A very substantial degree of accommodation still needed for underlying inflation pressures to build up and support headline inflation.”

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