Fri, Dec 04, 2020 @ 23:09 GMT
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ECB Panetta: Euro appreciation is a factor to watch closely

ECB Executive Board member Fabio Panetta said in a speech that the outlook is “clouded by an unprecedented degree of uncertainty”. It depends on public health developments, as well as “new adverse shocks” including disorderly Brexit and lost of momentum.

He pointed out, “the appreciation of the euro is one factor that we need to watch closely with regard to its implications for the medium-term inflation outlook, particularly at a time when current and expected inflation rates are both very low.” “The sustained appreciation in the external value of the euro has brought about an undesirable tightening of financial conditions and has offset some of the monetary accommodation provided by our measures,” he added.

Slowdown in momentum of services sector is another source of concern, as well as labor market. Credit risk, corporate balance sheet vulnerabilities, weak aggregate demand and ample capacity, would likely “compress investment. New wage negotiations could also leader to weak inflation dynamics.

Full speech here.

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