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5 Jun 2014
Draghi unveils package of measures to boost liquidity
FXStreet (Łódź) - During the press conference following ECB's monetary policy meeting on Thursday, at which the Governing Council unanimously decided to cut the refi, deposit and marginal lending facility rates in June (to 0.15%, -0.10 and 0.40%, respectively), Mario Draghi also said the ECB would conduct targeted 400 billion euro LTRO to boost lending, he announced preparations towards purchases of asset backed securities, as well as cancelling SMP sterilization.
The package is aimed at providing additional monetary policy accommodation and supporting lending to the real economy, Draghi said. They should help bring inflation closer to the 2% target.
The ECB head assured that the Governing Council is ECB is unanimously committed to using unconventional measures if inflation remains low for too long. In the light of the current outlook for infaltion rates will be kept at low levels for an extended period of time.
ECB's staff macroeconomic forecasts show that the HICP should grow by 0.7% this year, by 1.1% in 2015, by 1.4% in 2016. As far as GDP is concerned, it should increase by 1.0% in 2014, by 1.7% in 2015 and by 1.8% in 2016.
Draghi signaled that geopolitical tensions and risks stemming from emerging markets could adversely affect the Eurozone economy.
During the Q&A part of the press conference Draghi said that slight technical interest rate adjustments are a possibility, but as the "lower band" has been reached borrowing costs can't really be reduced further. Still, he stressed that this package of measures in not the end of ECB's actions.
Following the rate cut announcement the euro dropped to around 1.3560 against the greenback and during the press conference it had reached 1.3500, currently stabilizing at 1.3540.
"The $1.3560-80 may be the pivot level, above which the intraday shorts may be squeezed," Marc Chandler, Global Head of Currency Strategy at BBH suggests.
The package is aimed at providing additional monetary policy accommodation and supporting lending to the real economy, Draghi said. They should help bring inflation closer to the 2% target.
The ECB head assured that the Governing Council is ECB is unanimously committed to using unconventional measures if inflation remains low for too long. In the light of the current outlook for infaltion rates will be kept at low levels for an extended period of time.
ECB's staff macroeconomic forecasts show that the HICP should grow by 0.7% this year, by 1.1% in 2015, by 1.4% in 2016. As far as GDP is concerned, it should increase by 1.0% in 2014, by 1.7% in 2015 and by 1.8% in 2016.
Draghi signaled that geopolitical tensions and risks stemming from emerging markets could adversely affect the Eurozone economy.
During the Q&A part of the press conference Draghi said that slight technical interest rate adjustments are a possibility, but as the "lower band" has been reached borrowing costs can't really be reduced further. Still, he stressed that this package of measures in not the end of ECB's actions.
Following the rate cut announcement the euro dropped to around 1.3560 against the greenback and during the press conference it had reached 1.3500, currently stabilizing at 1.3540.
"The $1.3560-80 may be the pivot level, above which the intraday shorts may be squeezed," Marc Chandler, Global Head of Currency Strategy at BBH suggests.