Mario Draghi, president of the European Central Bank took to the stage just after mid-day on Thursday and regretfully his announcement didn’t deliver what many had anticipated or hoped for.
As expected no change was announced by the ECB and rates remained at 0%, whilst deposit rates were also left unchanged at -0.4 per cent.
However, what worried markets more than the lack of rate change was the omission of further stimulus and certain extension of the ECB’s bond buying program. Which is due to end in just six months. Draghi also went as far to mention an extension as yet hadn’t been discussed as the ECB felt it wasn’t warranted.
Draghi similarly defended the current Quantitative easing package stating that it was indeed effective and that the ECB did have more tools available within their mandate.
Instead Draghi highlighting the necessity of Eurozone Governments to ‘Substantially step up’’ efforts in order to combat unemployment and non-existent growth within the Eurozone.
Growth in the Eurozone slowed from 0.6% in the first quarter to 0.3% in second. During the meeting Draghi adjusted growth forecast slightly from June’s estimate of 1.7% to 1.6%. His reasoning behind the adjustment was the unknown effects of the UK’s decision to leave the EU. The European central bank also tweaked its inflation forecast for next year moving it from 1.3% to 1.2%
Following the announcements EUR/USD hit a two-week high touching 1.1315. Whilst GBP/EUR hit a low of 1.1779
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