Investing.com - European Central Bank (ECB) president Mario Draghi said on Monday that inflation in the euro area remains subdued, but that the monetary authority was prepared to increase the size and/or duration of its asset purchase program if deemed necessary.
In a speech delivered to the Committee on Economic and Monetary Affairs of the European Parliament, Draghi noted that the pickup in headline inflation in December and January largely reflected sizeable upward base effects and recent increases in energy prices.
“So far underlying inflation pressures remain very subdued and are expected to pick up only gradually as we go on,” he said.
Draghi explained that the still significant degree of labor market slack and weak productivity developments were weighing down on wage growth, while further noting that the risks to the outlook remained tilted to the downside and related predominantly to global factors.
“Our current monetary policy stance foresees that, if the inflation outlook becomes less favorable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council is prepared to increase the asset purchase program in terms of size and/or duration,” Draghi concluded.
After the publication of speech, EUR/USD was trading at 1.0714 from 1. 0715 earlier, while EUR/GBP was at 0.8602 from 0.8607 ahead of the release.
Meanwhile, European stock markets were trading lower. The Euro Stoxx 50 traded down 0.88%, Germany's DAX fell 0.89%, France’s CAC 40 lost 0.86%, while London’s FTSE 100 dropped 0.25%.