The president of the ECB, Mario Draghi, is testifying before a committee of the European Parliament.
EUR/USD traded lower, struggling with 1.25 and is now taking another leg down under 1.2480.
- Most recent forecasts have been revised downwards
- Expecting a moderate recovery in 2015-2016.
- Demand supported by monetary policy stimulus, among other events.
- High unemployment, unutilized capacity and balance sheet adjustments weigh.
- Risks are on the downside.
- Geopolitical risk could dampen confidence and investment.
- Inflation in the euro-are remains very low – expected to remain at these levels before rising in 2015-16.
- We closely monitor developments
- Money growth rate has increased moderately.
- The turning point in credit growth is behind us.
- Fragmentation has receded significantly since the peak of the crisis.
- Since the beginning of June, market money rates are declining – a result of monetary policy.
- EONIA is not expected to exceed 0.25% before 2018.
- Other rates are low.
- Compression of spreads extended after September announcements.
- Balance sheet expected to return to 2012 dimensions
- Our measures are set to bring inflation to target.
- We will stay alert.
- GC unanimous to use additional unconventional measures to reach targets, and tasked staff to make preparations.
- Draghi is basically repeating his words from the recent rate decision, in which he defied discontent.
- Structural reforms are needed.
- Banking union should be completed after the stress tests.
- New low is 1.2472. Support awaits at 1.2440.
- LTRO helped in stabilizing the collateral framework.
- Draghi goes on to talk about the collateral system and away from monetary policy.
- 2015 is the year when everybody must work together to return the euro-zone growth to track.
- Questions begin: the first question in Spanish is about the trillion euro expansion of the balance sheet.
- Answer: we stand ready to do more, unconventional measures.
- Fiscal and monetary expansion cannot do the job alone without structural reforms.
- Draghi continues answering questions unrelated to monetary policy, but EUR/USD continues falling to 1.2460 on USD strength.
Earlier, a fellow member at the European Central Bank, Yves Mersch, opened the door to a wide variety of financial instruments that the ECB could buy, including state bonds, ETFs, shares, etc.
Another colleague, Praet, said that the fiscal position in the euro-zone should be neutral or slightly expansionary in 2015. He also said that the lack of investment from firms is the weakest link of the euro-zone recovery.
In the US, the Empire State Manufacturing number fell below expectations with a score of 10.2 points. Industrial output was expected to rise by 0.2% after 1% last month.
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