Draghi Says Bank Ready To Add More Stimulus
The euro was steady at $1.25 at 7:00 GMT on Tuesday morning despite comments from the ECB’s Mario Draghi on Monday. The common currency has been under pressure recently as the region’s financials indicate that the region will need more stimulus from its central bank in order to stay on its feet. On Monday, European Central Bank President Mario Draghi indicated that the bank was willing and ready to do so if the situation does not improve.
The Wall Street Journal reported that Draghi told the European Parliament that the bank was committed to expanding its balance sheet to levels seen during the height of the crisis. Draghi also confirmed that he and his peers were prepared to continue adding to their stimulus efforts in order to counteract the bloc’s falling inflation.
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Eurozone inflation has been a thorn in the bloc’s side as the figures have consistently fallen lower from month to month over the course of 2014. In October, inflation was just 0.4 percent, well into what the ECB has termed "the danger zone" below 1 percent and far below the bank's 2 percent target.
However, data out on Monday may have been a silver lining for the bloc as the euro’s diminishing value boosted exports in September giving the region much needed income. The region’s trade surplus rose to 18.5 billion euros in September, a sizable increase from last year’s 10.8 billion euro surplus in the same month.
Domestic demand remained a problem for the bloc though, as sky high unemployment figures and deteriorating confidence in the region kept consumers from spending. Many are expecting to see the ECB step in at its December meeting and expand its current asset purchase program to include corporate bonds. Such a move would likely push the euro lower as the ECB’s fiscal policy moves in the opposite direction to that of the Federal Reserve.
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