Investing.com – European Central Bank president Mario Draghi said on Monday that the euro zone monetary authority will decide later this year on its policy measures.
In a speech delivered to the Committee on Economic and Monetary Affairs of the European Parliament, Draghi expressed his view that the economic expansion is now “firm and broad-based” across the euro zone countries and was likely to continue its momentum in the period ahead.
“The ongoing recovery is, crucially, driven by domestic forces, and the labor market has notably improved,” Draghi said.
The ECB chief noted that the risks to the economy were roughly balanced although he noted that the downside risks were mainly related to global factors and developments in foreign exchange markets.
“The recent volatility in the exchange rate represents a source of uncertainty which requires monitoring with regard to its possible implications for the medium-term outlook for price stability,” he said.
Draghi showed a slight change of stance by noting that the ECB was “becoming more confident” that inflation would eventually return to target though he repeated that a “very substantial degree of monetary accommodation is still needed for the upward inflation path to materialize”.
“We will decide later this year on a re-calibration of our instruments that maintains the degree of monetary support that the euro area economy still needs to complete its transition to a new balanced growth trajectory characterized by sustained conditions of price stability,” he explained.
The euro showed volatility as Draghi spoke, initially extending losses. At 9:19AM ET (13:19GMT), however, EUR/USD was at 1.1881 compared to 1.1875 ahead of the remarks, while EUR/GBP traded at 0.8792 compared to 0.8780 earlier.
Meanwhile, European stock markets were trading mixed. The Euro Stoxx 50 inched up 0.03%, Germany's DAX advanced 0.15%, France’s CAC 40 traded down 0.28%, while London’s FTSE 100 fell 0.25%.