- Mario Draghi, ECB President
The single currency advanced against the U.S. Dollar on Thursday, hitting 1.3650, the highest level since October, even despite the strong fundamental data from the United States. The Euro benefited from Mario Draghi's comments, who said inflation within the 17-nation bloc will stay below 2% for the next two years and pledged to act if necessary to lift a listless economy.
The ECB also unveiled its growth forecast, saying the economy will shrink by 1.1% next year, a slight tick upward from a previous estimate of just 1.0%, as downside risks still weigh on the Eurozone economy. Meanwhile, the central bank predicts the monetary union to expand by 1.5% in 2015, finally posting solid growth. Regarding the inflation outlook, Draghi lowered the forecasts, saying the inflation will stand a 1.1% next year, down from 1.3% in September. Moreover, even in 2015, it is likely to hover below the desired target, with the measure of inflationary pressure standing at 1.5%.
While both price and growth outlooks are grim, fundamentals of the common currency bloc are improving, as effects of austerity measures begin to wane. Draghi also pointed out that effects of the recent rate cut are still not yet fully felt due to a weak state of European banks.
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