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ECB leaves open door for more stimulus

Friday, Oct 21 2016
ECB leaves open door for more stimulus

The European Central Bank left ultra-loose monetary policy unchanged on Thursday but kept the door open to more stimulus in December, firmly shooting down any talk of tapering its 1.7 trillion euro asset-buying program. Offering few clues to the euro zone central bank's next move, ECB President Mario Draghi left a wide range of options on the table and emphasized that a long-awaited rise in inflation is predicated on "very substantial" monetary accommodation.

Struggling to stave off deflation, the ECB has provided unprecedented stimulus for years. It has cut rates into negative territory, buys 80 billion euros worth of bonds each month and has offered banks free loans, all with the aim of boosting inflation back to the ECB's target of just under 2 percent. In a possible argument for even more easing, Draghi warned on Thursday that an expected rise in inflation in the coming month would be driven mostly by the fading effect of past oil price falls, raising doubts whether it will be sustainable. "There are no signs yet of a convincing upward trend in underlying inflation," Draghi told a news conference.

 

Euro is currently being traded around 1.0950 level. Pair is likely to find support around 1.09 area and resistance above 1.0980 handle.

More in this category: « UK Retail Sales unchanged in September Unemployment Claims rose to 260,000 »

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