Euro Steady Following ECB Meeting
The euro settled below $1.27 on Friday morning after jumping to a seven-month high on Thursday following the European Central Bank’s policy meeting. The common currency traded at $1.2646 at 7:30 GMT after the bank did not suggest that any type of quantitative easing program was on the horizon.
Speaking at a press conference following the meeting, bank President Mario Draghi emphasized that the bank’s main goal is to bring inflation up toward 2 percent and that the ECB’s balance sheet is simply an instrument. Bloomberg reported that the ECB previously vowed to bring its balance sheet back to the levels seen in 2012, which would imply that about one trillion euros worth of assets could be added.
Most expect that the bank will eventually have to use some sort of quantitative easing program in order to correct the eurozone’s sinking inflation, but for now the focus looks to be on the bank’s most recent easing measures aimed at expanding credit. The bank has offered cheap loans to eurozone banks in an effort to boost lending across the bloc and help spur on the economy, but so far, participation from the region’s banks has been disappointing and there has been little impact on the eurozone economic indicators.
The bank’s decision not to move forward with a large scale asset purchase program could reflect some disagreement among the region’s finance ministers over whether or not such a program is necessary. Germany and several others have been very open about their lack of support for injecting more funds into the eurozone’s financial system without more stringent structural reforms.
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