ECB Nominees Sound Pretty Dovish, Which Should Keep EUR/USD Bearish
The legendary president of the European Central Bank Mario Draghi ended his mandate last month and he was replaced by the previous IMF (International Monetary Fund) president Christine Lagarde.
At the end of this year, a number of ECB board members will have to leave as well, since their mandate ends too and the new nominees are making some comments now, which sound pretty dovish. Below are the comments from Fabio Panetta:
- Inflation outlook seems to fall short of ECB target
- Calls for accommodataive monetary policy
- Incoming information suggests growth slowdown is more protracted than expected
- September policy package will provide necessary support to the economy, inflation
- Different views in the ECB are a sign of a frank, constructive debate
- Evidence indicates that effect of NIRP on the economy has been positive
- Risk of side effects of NIRP remains
- ECB must be alert to possible unintended consequences of its policies towards the stability of the financial system
Panneta will be succeeding Benoit Coeure if he gets the job. The comments sound dovish, especially the call for more accomodative policy and the inflation remarks. So I guess we all know which side of the fence he is on and he will do well in that regard replacing another dove.
- Accommodative monetary policy continues to be needed
- September policy package can be justified by current inflation data
- As well as inflation outlook over the medium-term
They both point to softening inflation, although today’s report was pretty positive, showing an increase in both, headline and core CPI (consumer price index). They also like the accommodative policy, which means that they will vote to keep the monetary easing going. EUR/USD has made another bearish move today and such comments should help keep it like that.
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