Draghi Pledges Further Easing
The euro looked likely to finish the week on a loss after European Central Bank President Mario Draghi said he was willing to do more to help stimulate the eurozone economy if need be.
The common currency traded at $1.2681 at 7:00 GMT as investors saw Draghi’s remarks as a sign that some type of large scale easing package was on its way.
The euro gained some momentum after the Federal Reserve’s policy meeting minutes revealed that the U.S. central bank wasn’t as confident about the U.S. economy as many had believed. Instead, the nation’s FOMC members discussed the possibility that weakness in other economies like Europe and China could put unforeseen pressure on exports and that inflation was likely to remain below the bank’s 2-percent target.
The minutes put pressure on the U.S. dollar as investors revised their predictions for a rate hike from early 2015 to later in the year.
However on Thursday, Bloomberg reported that ECB president Mario Draghi pledged to ease further using unconventional means if the eurozone continues to struggle. Draghi said the bank is willing to alter its balance sheet if the need arises, something some of the eurozone’s policy makers have been hesitant about.
Recent comments from Bundesbank President Jens Weidmann suggest that not all of the eurozone’s central bankers are on board with a large scale easing package.
Instead, Weidmann suggested that the ECB should put more emphasis on structural reforms within individual nations rather than providing more cash. The discrepancy between Weidmann’s view and Draghi’s promises raises a question about whether or not the bank will be able to agree on any new stimulus measures at future meetings.
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