- ECB President Mario Draghi
The European Central Bank will monitor the economic impact of strengthening shared currency, as policy makers are concerned that it will hamper their efforts to pull the economy out of recession. While the Eurozone economy is showing some signs of the improvement, after the sovereign debt crisis drove it into recession last year, the very strong Euro can weaken the recovery before it has begun, by curbing exports and pushing inflation too low. The President of the ECB Mario Draghi also mentioned that the economic activity should gradually recover, and also noted that the ECB will publish new economic projections next month. On Thursday, the ECB left its benchmark interest rate at 0.75%, meeting analysts' expectations.
"The exchange rate is not a policy target, but it is important for growth and price stability," Draghi said at a press conference in Frankfurt today after the ECB kept its benchmark rate at a record low of 0.75%. "We want to see if the appreciation is sustained, and if it alters our assessment of the risks to price stability."
"The market is reading the comments as generally downbeat," said Adam Cole, head of global foreign-exchange strategy at Royal Bank of Canada in London. "That and the comments about the risks to inflation have pushed the euro down."
© Dukascopy Bank SA