ECB "will not not hesitate to act", Dragi says

Monday, Feb 15 2016

The euro zone will need "a strong effort" from all its policymakers if it is to overcome the "significant challenges" that global markets have thrown down over the past few weeks, the head of the European Central Bank has told the region's lawmakers Monday. “In the light of the recent financial turmoil, we will analyze the state of transmission of our monetary impulses by the financial system and in particular by banks,” Draghi told European Parliament lawmakers in Brussels on Monday.

In addition, the ECB will examine the impact of renewed declines in energy prices and “if either of these two factors entail downward risks to price stability, we will not hesitate to act,” he said. Referring to the global economy, Draghi said that “a continuation of the rebalancing process is needed to secure sustainable growth over the medium term.” He also said this “could imply some headwinds in the short term, which will require close monitoring of the related risks.” Draghi underlined the ECB’s efforts since 2014 to repair confidence in the region’s banking sector.

“The fall in bank equity prices was amplified by perceptions that banks may have to do more to adjust their business models to the lower growth/lower interest-rate environment and to the strengthened international regulatory framework that has been put in place since the crisis,” he said. “However, we have to acknowledge that the regulatory overhaul since the start of the crisis has laid the foundations for durably increasing the resilience not only of individual institutions but also of the financial system as a whole.”

Euro is currently being traded few points above 1.1130 level. Pair is likely to find support around 1.1080 handle and resistance above 1.12 level. There will be no data releases in the rest of the session.

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