With the threat of deflation still stalking euro-area economies
that are barely out of recession, the European Central Bank president all but
committed himself to providing further stimulus at June’s monetary policy
meeting.
After keeping rates at record lows yesterday, Draghi told reporters
that the 24-member Governing Council is “comfortable with acting next time.” He
underscored that position with comments showing a heightened concern that a
rising euro will depress prices and derail the recovery. Draghi’s remarks sent
the euro and money-market rates plunging as investors bet the ECB will deliver
on its long-standing pledge to act if needed.
The comments were reminiscent of
his predecessor, Jean-Claude Trichet, who typically signaled rate
increases, though not reductions, a month in advance using the phrase “strong
vigilance.” The euro weakened from a 2 1/2-year high against the dollar after
European Central Bank President Mario Draghi said policy makers were ready to
ease monetary policy in June if needed. The euro dropped 0.5% to $1.3840 after
appreciating to $1.3993, the strongest level since Oct. 31, 2011.
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