- Reuters/Arnd Wiegmann
LONDON – The euro climbed above the psychologically significant barrier of 1.20 against the dollar on Thursday afternoon as European Central Bank President Mario Draghi spoke to journalists following the bank’s latest policy announcements.
Draghi’s post decision comments – in which he said that the ECB’s governing council will begin to discuss further tapering of its quantitative easing programme in the “autumn” and could make an announcement at its October meeting – sent the euro higher by more than 1%.
The euro’s rise on Thursday afternoon reflects Draghi’s comments that he does not believe that recent strength in the currency will have any significant impact on either eurozone inflation or growth going forward.
“Recent volatility in the exchange rate represents a source of uncertainty which requires monitoring with regard to its possible implications for the medium-term outlook for price stability,” he said, having said that the euro area’s economic prospects are “broadly unchanged” from the ECB’s previous forecasts.
The ECB increased its forecast for 2017 growth in the eurozone to 2.2% from 1.9% at the previous forecast. Expectations for 2018 and 2019 were increased 0.1 percentage points to 1.8% and 1.7% respectively
The chart below illustrates the euro’s rise:
- Markets Insider
Speaking at the traditional post-decision press conference at the ECB’s headquarters in Frankfurt, Draghi said that the bank’s policymakers would look at the “calibration” of its “policy instruments” in the months to come, saying that he expected the bank to ready to announce its decision at its October meeting.
“This autumn we will decide on the calibration of our policy instruments beyond the end of the year, taking into account the expected path of inflation and the financial conditions needed for a sustained return of inflation rates towards levels that are below, but close to, 2%,” he said during his introductory remarks.
Draghi said that the bank’s governing council had held initial discussions about the future of policy at its September meeting, which he described as “very, very preliminary” and did not contain talk of “policy options.”
Earlier on Thursday, the ECB maintained a deposit rate of -0.4%, a refinancing rate of 0.0%, and a quantitative easing programme of up to €60 billion per month, as had been widely expected.