- Mario Draghi, ECB President
The Euro zone's growth and inflation prospects have weakened and policy makers should take these developments into account when deciding on monetary policy. Inflation across the 19-country currency bloc slid into negative territory in February, virtually ensuring the ECB will unveil additional stimulus when it reviews policy on March 10. Meanwhile, Bank of France Governor Francois Villeroy de Galhau said that he ECB is ready to deploy fresh stimulus measures to underpin worryingly low inflation. The central bank's tools include targeted loans to commercial banks, more asset purchases and providing more details about how long the ECB plans keep rates at low levels. Mr. Villeroy de Galhau noted that the brief period of negative inflation does not mean the arrival of a more prolonged period of falling prices. Inflation should turn positive again later this year with the stabilization of oil prices.
At the same time, ECB Board Member Benoit Coeure also dropped a clear hint that the central bank would ease monetary policy this month, after underscoring the necessity of stimulating economic growth and pushing inflation up. However, Mr. Coeure noted that the central bank is well aware of negative rate impact on bank profits. Money markets now price at least two rate cuts this year, taking the deposit rate to –0.55% from the current –0.3% by the end of 2016.
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