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4/6/2017, 9:05 AM (Source: TeleTrader)
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Draghi: Change in ECB's stance depends on inflation

Monetary policy is "a key factor behind the resilience of the euro area economy over recent years," said Mario Draghi, president of the European Central Bank. Speaking on Thursday at the ECB and Its Watchers Conference in Frankfurt, he nevertheless stressed risks are still pointed to the downside, as inflation still clings on rate-setters' measures.

Any change in strategy concerning all three instruments – interest rates, asset purchases and forward guidance, can only come with sufficient confidence price stability can be reached in the mid-term, Draghi added in prepared remarks. He pointed out policymakers are expecting downward pressures on inflation to weaken. 

"Of the 1.4 percentage point rise from November last year to February this year – when inflation peaked at 2% – more than 90% was explained by energy and food price inflation... Decomposing the forces that have weighed on wage growth, we find two principal drivers: first, the still high unemployment rate and its effect on wage bargaining dynamics; and second, a below-average contribution from past inflation in wage formation, caused by the last few years of exceptionally low headline inflation," said the president of the ECB.

Breaking the News / IT