ECB President Mario Draghi: Fiscal Policy Expected On September
ECB President Mario Draghi looking for new stimulus
ECB President Mario Draghi doesn’t cut rates during yesterday session.
Draghi set the stage to deliver another round of monetary stimulus in September to combat the euro area’s severe economic slowdown.
“This outlook is getting worse and worse,” Draghi said in Frankfurt on Thursday after a meeting of the ECB’s Governing Council. “It’s getting worse and worse in manufacturing, especially, and it’s getting worse and worse in those countries where manufacturing is very important.”
“Markets will keep speculating about the composition of the stimuli, and were somewhat disappointed with the lack of details,” said Piet Christiansen, an economist at Danske Bank, which is expecting 20 basis points of rate cuts and more QE. “Still, it’s a matter of when and how ECB will act, no longer if.”
The German sentiment mirrors the mood across the eurozone as a contraction in manufacturing. Draghi said the risk of a broad recession is “pretty low” but he repeatedly noted that significant support is necessary.
“On the inflation front, we don’t like what we are seeing,” he said. “That’s very important.”
“If there were to be a significant worsening in the euro-zone economy, it’s unquestionable that fiscal policy, a significant fiscal policy, becomes of the essence,” he said.
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