Dovish Tones From ECB’s Coeure
ECB governing council member, Benoit Coeure, is leaving the European Central Bank soon, but his take on the situation is important nonetheless, since it gives an insight of how the ECB sees the situation. The ECB cut deposit rates in September to -0.50% and started another QE programme last month.
The Euro hasn’t acted much, but it might turn more bearish if the ECB keep this dovish bias. Below are some of Coeure’s main comments:
- Lowering inflation target would be wrong
- ECB actions have been effective
- No doubt ECB can ease policy further with current tools
- Central banks may have to navigate in a low growth, low inflation environment
- ECB should clarify that the medium-term inflation goal is 2%
- ECB could communicate a tolerance band for inflation
- But tolerance band is not an invitation for inaction, complacency
- ECB could communicate the range of inflation outcomes that can be considered as acceptable in normal times
He is shedding some light on some things that are possibly being discussed by the governing council. None of this is much of anything new, but it does lay out that pretty much all options are still on the table for an inflation. Although, all the options point to further easing, rather than monetary tightening. The Euro has turned bearish today and continues to slide lower, so the upside in EUR/USD is very limited.
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