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2 Nov 2015
‘Whether a further stimulus is necessary is an open question’ – ECB Draghi
FXStreet (Mumbai) - In an interview with an Italian daily over the weekend, published on Monday by MNI, the European Central Bank (ECB) President Mario Draghi reiterated his ready to do more stance while adding that the central bank’s medium-term inflation target of just below 2% is at risk.
Key Quotes:
"We will see whether a further stimulus is necessary. This is an open question. The programs that we have put together are all characterised by their capacity to be used with the necessary flexibility,"
"If we are convinced that our medium-term inflation target is at risk, we will take the necessary actions."
"From mid-2016 to the end of 2017, also due to the delayed effect of the depreciation in the exchange rate, we expect inflation to increase gradually,"
"After the meeting in Malta, we asked all the relevant committees and ECB staff to prepare analyses of the relative effectiveness of the different options for the December meeting,"
"The circumstances informing the decision to reduce the bank deposit rate to its current level actually consisted of a macroeconomic framework that has since changed. The price of oil and the exchange rate have changed. I would say that the global economic situation has changed,"
"Other countries have lowered their rate to much more negative levels than ours. The lower bound of the interest rate on deposits is a technical constraint and, as such, may be changed in line with circumstances. The main test of a central bank’s credibility is – as I have said before – the ability to achieve its objectives; it has nothing to do with the instruments,"
"The interest rate on deposits could be one of the instruments that we use again”, although "it is too early to say in any case that 'this is the menu' and that 'there is nothing to add'.”
Key Quotes:
"We will see whether a further stimulus is necessary. This is an open question. The programs that we have put together are all characterised by their capacity to be used with the necessary flexibility,"
"If we are convinced that our medium-term inflation target is at risk, we will take the necessary actions."
"From mid-2016 to the end of 2017, also due to the delayed effect of the depreciation in the exchange rate, we expect inflation to increase gradually,"
"After the meeting in Malta, we asked all the relevant committees and ECB staff to prepare analyses of the relative effectiveness of the different options for the December meeting,"
"The circumstances informing the decision to reduce the bank deposit rate to its current level actually consisted of a macroeconomic framework that has since changed. The price of oil and the exchange rate have changed. I would say that the global economic situation has changed,"
"Other countries have lowered their rate to much more negative levels than ours. The lower bound of the interest rate on deposits is a technical constraint and, as such, may be changed in line with circumstances. The main test of a central bank’s credibility is – as I have said before – the ability to achieve its objectives; it has nothing to do with the instruments,"
"The interest rate on deposits could be one of the instruments that we use again”, although "it is too early to say in any case that 'this is the menu' and that 'there is nothing to add'.”