The euro fell against the dollar on Friday after the European Central Bank (ECB) signaled it would continue its monetary easing policies for the foreseeable future. ECB President Mario Draghi, speaking at a press conference, emphasized the need for a substantial degree of monetary accommodation to support the Eurozone’s economic recovery.
Key Takeaways from the ECB Press Conference
- The ECB will continue its asset purchase program, currently at €80 billion per month, until at least March 2017.
- Interest rates will remain at their current levels, or lower, for an extended period.
- Draghi highlighted the downside risks to the Eurozone’s economic outlook, citing global uncertainty and geopolitical factors.
The ECB’s commitment to maintaining its current course of action has surprised some investors, who had anticipated a potential tapering of the asset purchase program. The central bank’s stance reflects concerns about persistently low inflation and sluggish economic growth in the Eurozone.
Market Reaction
The euro’s decline against the dollar was immediate following Draghi’s remarks. The currency pair fell to a low of 1.0880, before recovering slightly. Analysts suggest that the ECB’s dovish tone will continue to weigh on the euro in the near term.
Expert Analysis
According to Jane Foley, Senior Currency Strategist at Rabobank, “The ECB is clearly in no hurry to tighten monetary policy. This is likely to keep the euro under pressure against the dollar and other major currencies.”
The ECB’s next policy meeting is scheduled for December, where policymakers will likely provide further guidance on the future of the asset purchase program.
