“I’m pretty confident that the strong supervision and robust regulation and better communication by the supervisory agencies… will still improve the situation … and our perception in the world’s eyes”, he told reporters in Frankfurt.
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“Overall, Draghi appeared to be very determined to say nothing of any significance”. He said that, so far, banks and other financial institutions, had been “fairly resilient” in the wake of Brexit.
The ECB held the main interest rate at 0% and the bank said it expected rates to remain at record lows or fall to lower levels for an extended period of time.
While economic risks are tilted to the downside, euro-area markets have weathered recent volatility well and financing conditions remain “highly supportive”, Draghi said at a news conference in Frankfurt.
Instead, he only signalled the “readiness, willingness, ability” of European Central Bank policymakers to deploy its toolbox if needed, while praising the resilience of the markets following the Brexit vote.
CURRENCIES: The euro rose slightly to $1.1018 from $1.1015, while the dollar rose to 106.15 yen from 106.01 yen. Whilst markets have previously believed and taken comfort in Draghi’s words, it is increasingly apparent that the European Central Bank is running out of policy measures to tackle stagnant growth in the area; it will be interesting to see if they keep faith in him today. However, there are problems over the supply of bonds available for purchase as the bank can only buy debt with a yield above the -0.4% deposit rate.
Meanwhile, a Reuters poll of few analysts showed that they have cut 2017 euro zone growth forecasts to 1.3 percent from 1.6 percent, they left their inflation projection unchanged at 1.3 percent, a mixed reading for the European Central Bank, which targets inflation at just below 2 percent.
The ECB’s stimulus programme, where it buys €80bn of bonds a month, has also been left unchanged and will run until March 2017 and beyond “if necessary”.
The ECB Survey of Professional Forecasters (SPF) collects the views of experts affiliated with financial or non-financial institutions based within the European Union. The step pumps newly created money into the banking system, and the hope is that will increase lending and raise inflation to levels more consistent with steady growth.
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The ECB is concerned as it is the eurozone’s bank supervisor.
