ECB President Mario Draghi emphasized in a speech that “monetary policy remains committed to its objective and does not resign itself to too-low inflation… forever or even for now.” Also, he reiterated monetary policy is “patient, persistent and prudent”.
He added: “Patient, because faced with repeated negative shocks we have had to extend the policy horizon. Persistent, because monetary policy will remain sufficiently accommodative to ensure the sustained convergence of inflation to our aim. And prudent, because we will pay close attention to underlying inflation dynamics and to risks and will adjust policy appropriately.”
Draghi also reiterated risks remains “tilted to the downside” and indicators point to “lingering softness”. And he warned, “in the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required.” The options on further measures were “raised and discussed” at ECB’s last meting.
The measures including enhancing the forward guidance on bias and conditionality. Also, “Further cuts in policy interest rates and mitigating measures to contain any side effects remain part of our tools”. And, “the APP (asset purchase program) still has considerable headroom.”
Euro drops notably after the comments.
