Article by ForexTime
The Euro was flung onto a chaotic rollercoaster ride on Thursday following the European Central Bank’s decision to keeping its monetary policy stance unchanged despite the worrying state of the European economy. Official interest rates were left unchanged while monthly asset purchases of $80 billion were confirmed to run until the end of March 2017 which left investors empty handed. With uncertainty still a recurrent theme in the markets, most central banks have adopted a stance on inaction and such was displayed in today’s ECB meeting. Although Draghi pledged that the ECB would act by using all instruments available within its mandate to bolster Eurozone growth, this may have fallen on deaf ears.
It is becoming increasingly clear that the Eurozone is entangled in a losing battle with faltering growth while static inflation levels continue to question the ECB’s credibility. Although Draghi also suggested that the economic recovery in Europe is likely to be dampened by the UK’s Brexit vote, this was still not enough to prompt the central bank to act. While Draghi’s dovish rhetoric may have opened doors for an extension to bond buying program beyond March 2017, the visible disappointment could propel the Euro higher. Sentiment remains bearish towards the Eurozone and today’s inaction may spark further questions over the central bank’s ability to jumpstart Eurozone growth.
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Article by ForexTime
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