Finance

Exchange Rate 'Volatility' Is 'Source of Uncertainty': Draghi

Exchange Rate 'Volatility' Is 'Source of Uncertainty': Draghi

The President of the European Central Bank (ECB) yesterday forced the Euro to gain value.

The meeting of the European Central Bank was held last Thursday and as most analysts expected, the interest rate remained unchanged and moved.

As the euro strengthens, the latter course of action becomes less appealing, as an end to quantitative easing would push the euro up still further and risk damaging Europe's exports and stalling the region's newfound growth.

With respect to the non-standard monetary policy measures, the Governing Council confirms that net asset purchases are projected to continue at a new monthly rate of 30 billion Euro by the end of September 2018 or after that, if necessary, and in any case, while the Governing Council does not see a sustained correction of the inflation trend in line with its inflation target.

"The most interesting thing for this meeting will be exactly how they are going to try and clarify some of their comments that came out after the December minutes that were interpreted as hawkish", said Alessio de Longis, portfolio manager for OppenheimerFunds' global multi-asset group. This will contribute to both favorable liquidity conditions and an appropriate monetary policy stance.




But that progress was stopped later in the day as Trump sought to play down the speech by the USA treasury secretary by saying that the dollar was bound to get stronger due to the strong economic data. Currently, the central bank of the region intends to buy bonds worth 2.5 trillion Euro by September this year.

He is now set to address reporters in a 1330 GMT news conference where the euro's rise and expected changes in the bank's policy guidance will likely take centre stage. At the moment, the intention is to buy debt until inflation falls below 2%, a level that cannot be reached and held for nearly five years.

"But the real driver has been the parlous performance of the USA dollar despite rising United States rates and solid U.S. growth".

The Frankfurt-based bank also again confirmed it planned to buy bonds under its asset purchases programme at 30 billion euros (37.2 billion dollars) a month from January and until at least September as it waits for annual inflation to climb towards the bank's target of just below 2%. The business and consumer confidence have been at the highest level for more than a decade.