Published: Sat, March 10, 2018
Markets | By Rosalie Gross

Draghi says unilateral trade policy moves are 'dangerous'

Draghi says unilateral trade policy moves are 'dangerous'

Policy makers meeting in Frankfurt said quantitative easing will continue at the pace of 30 billion euros ($37 billion) until at least the end of September, but left out the so-called easing bias that the plan could be increased in "size and/or duration" if the inflation outlook deteriorates.

The ECB will reinvest the principal repayments of maturing securities acquired under the asset purchase program for a prolonged period after the net asset purchase has ended and in any case as long as necessary. Some investors have been speculating such a trade war could complicate the ECB's plan to withdraw post-crisis monetary stimulus by hurting the euro zone's economy.

Indeed, economist polled by Reuters expect bond buys to conclude at the end of this year while a first rate hike is expected only in the second quarter of 2019.

The currency marked a 1-1/2 month low of 1.3712 last week and was just 1 percent above those levels. Rather than show that the global economy appears to be in fairly good health, they are likely to be used as further evidence by President Trump's trade hawks that his current policy is appropriate. According to the European Central Bank, this will contribute to both favorable liquidity conditions and an appropriate monetary policy stance.

BOJ monetary policy decision and briefing on Friday. Indeed, Draghi said inflation would hover around 1.5 percent for the rest of this year and even in 2020 only rise to 1.7 percent.

While ECB inflation projections have consumer prices hovering around the 1.5% inflation rate by the end of 2018 and rising gradually over the medium term, Draghi told reporters that underlying inflation measures will remain subdued - so "victory can not be declared yet".

The euro dropped to $1.2314 from $1.2411 late Wednesday in NY.

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"They toned down the easing bias but there is still a willingness to ease and the tone of Draghi's comments was still dovish, stressing that there is still not a convincing uptrend in inflation", said Chris Scicluna, head of economic research at Daiwa Capital Markets.

The recovery in the growth of loans to the private sector observed since the beginning of 2014 is progressing.

But Bank of Ireland slipped 2.2 per cent to €7.28. while Permanent TSB, drinks group C&C and paper and packaging group Smurfit Kappa were also among the fallers.

Having revived euro zone growth with lavish stimulus, the European Central Bank has been dialing back support in tiny increments, fearing that any big change could unravel its work and force an embarrassing and economically damaging policy reversal.

In order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively to raising the longer-term growth potential and reducing vulnerabilities. It's unclear what role he'll now be able to play at the European Central Bank, which dialed back stimulus options Thursday as the euro-area economy strengthens. Regarding fiscal policies, the increasingly solid and broad-based expansion calls for rebuilding fiscal buffers. All countries would benefit from intensifying efforts toward achieving a more growth-friendly composition of public finances. Especially given the circumstances of increased growth projections.

He said the Governing Council will ask whether the restrictions on Rimsevics "have had the effect of relieving him from office and if these measures comply with Union law".

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