Current: Draghi pessimistic, indicates bond purchases and interest rate cuts – Dax rises, Euro falls

Desperate Draghi with a new “Whatever it takes” speech?

Draghi just spoke at the conference organised by the ECB in Sintra, Portugal -here are the key points of the speech:

-the outlook is poor and continues to darken:

„Looking forward, the risk outlook remains tilted to the downside, and indicators for the coming quarters point to lingering softness. The risks that have been prominent throughout the past year, in particular geopolitical factors, the rising threat of protectionism and vulnerabilities in emerging markets have not dissipated. The prolongation of risks has weighed on exports and in particular on manufacturing.“

-more stimulus is needed:

„In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required.“

-this includes interest rate cuts and bond purchases:

„This applies to all instruments of our monetary policy stance.
Further cuts in policy interest rates and mitigating measures to contain any side effects remain part of our tools. And the APP still has considerable headroom“

Conclusion

A central banker notices that his medicine does not help – and now promises more from this medicine again! Euro down, Dax up…
That reminds of the Draghi speech 2012 with the sentences “whatever it takes”…
Yesterday inflation expectations in the Eurozone reached a new all-time low – and Draghi is trying to fight it…

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