Mario Draghi defend European Quantitative Easing and its politics of “whatever it takes” to support the real economy in the Euro Area. The ECB is going to keep liquidity high in Eurozone for as long as needed, despite oppositions and new growth and inflation forecasts.
The reaction of EUR/USD exchange rate was bearish on Thursday, due to the persistence of a strong divergence between European and American monetary policies: European Central Bank will continue its QE meanwhile the Federal Reserve just rose its interest rate in USA.
ECB rose Euro Area growth forecasts
European Central Bank left unchanged its interest rate at 0% on Thursday, but in the his press conference in Frankfurt the President Mario Draghi showed optimism about the economy of the Eurozone. The ECB raised growth forecasts from 2017 to 2019 and nudged up the expectations for inflation: in 2020 European inflation could be 1.7%, very close to the target of 2% of the central bank.
Draghi about European Quantitative Easing
Mario Draghi said that there’s no discussion of the quantitative easing program and the majority in ECB don’t share Knot’s critics. The President of ECB is more confident that the inflation target could be reached and the tightening of the FED will have no negative effects on the monetary policy in the Euro Area.
“It’s quite early before we talk about change in our monetary policy support,” Draghi told a news conference. “Though in the presence of an expansion which is gaining momentum, our confidence towards this objective is increasing and is certainly greater than it was at the last monetary policy meeting.” (Reuters)
Forex, the reaction of Euro-Dollar
EUR/USD strongly reacted to the conference of ECB, oscillating 92 pips in favor of the US dollar: the exchange rate fell from 1.1861 to 1.1769 in three hours.
The price of Euro-Dollar fell under the 1.1818 technical level and stopped its climb started on Wednesday.
The bullish trend of EUR/USD could have a braking now and the pair could keep falling until 1.1465 technical support, probably postponing its climb to next year.