Mario Draghi indicated that policy makers at the Central Bank are still waiting for inflation to catch up with the Euro zone economic recovery, pushing back any discussion of winding back stimulus until after summer 2017.
“We are finally experiencing a robust recovery where we only have to wait for wages and prices to follow course,” the European Central Bank president told reporters at a news conference after a monetary policy meeting in Frankfurt on Thursday. “We need to be persistent and patient and prudent, because we’re not there yet.”
Draghi’s assessment of the economic outlook for the Euro zone was very similar to the one he offered in June when he called for colleagues to allow the central bank’s stimulus time to work.
“While the ongoing economic expansion provides confidence that inflation will gradually glide toward levels in line with the inflation aim, it has yet to translate into stronger inflation dynamics,” Draghi said. “A very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up.”
The euro rose sharply against other major currencies following Draghi’s comment. The euro jumped to near-14-month-high of $1.1571 against the dollar on Draghi’s comments, while the pound hit an eight month low.
