- Jen Weidmann, ECB Governing Council member
The European Central Bank is prepared to act promptly to underpin stubbornly low inflation in the Euro zone, providing investors with the strongest hint yet that the central bank will initiate a new round of fresh stimulus measures at its December meeting. ECB President Mario Draghi mentioned changes to the central bank's asset purchase programme and deposit rate as possible tools to prevent further declines in inflation below its goal of just under 2%. Draghi highlighted that the Euro zone's recovery strength was modest and the global outlook for demand, particularly in emerging countries, had deteriorated dramatically recently. Moreover, ECB President admitted that the risk increased that the ECB would miss the inflation target. The Euro dropped to 1.0683 versus the Greenback following Draghi's speech, after trading near 1.071.
Meanwhile, Jens Weidmann, the head of the German Bundesbank and the ECB Governing Council member, disagreed that the central bank should add more stimulus. Weidmann argued that the current measures still need some time to start working, adding that low oil prices act as stimulus. Moreover, Weidmann noted that core inflation would gradually rise towards the goal and that sharp decline in energy prices is the main reason behind low price growth.
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