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In a speech in La Granda in northern Spain over the weekend, European Central Bank (ECB) policymaker Pablo Hernandez de Cos noted that a Hard Brexit remains a key risk to the Euro area growth while the ECB remains short of reaching its price target.

Key Quotes:

Britain’s withdrawal from the European Union “remains a focus of first-order uncertainty for the global economy and, especially, for the rest of the EU.

The most recent events, including the decision to suspend the activity of the British Parliament by the new prime minister until mid-October, have increased the likelihood that markets are giving to a hard Brexit.

Protectionist measures were among the greatest threats to global activity, in a reference to the trade war between the United States and China.

There was a possibility that low or even negative interest rates may have an adverse effect on financial stability and banks.

It is necessary to closely monitor this issue to determine whether measures that mitigate the adverse effects of low rates on the intermediation capacity of the banking system are necessary.

You cannot consider that observed or projected levels of inflation (…) are compatible with the ECB mandate.

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