Mario Draghi Reserved ahead of Jackson Hole

ECB President Mario Draghi had little to say about the future of monetary policy in the run-up oto the Jackson Hole meeting which would see key central bankers discuss monetary policy.

UNDEFINED - Wednesday, August 23, 2017

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The chief of the European Central Bank avoided commenting on how and when monetary stimulus may come to an end, instead praising economists’ research and saying that adjustments to monetary policy were not easy. He refused to comment on how the bank might adjust its own policy to improve the euro-zone’s economy, something which has been hotly debated among market articipants. He said that while forward guidance was a useful instrument, the latest research highlights that its effectiveness could be improved if it was combined with other, on-standard monetary policies.

At the June meeting, the ECB recognized that the economic outlook was improving in the euro-zone, and that deflationary pressure was lower. The bank updated its forward guidance, removing any references to potential further rate cuts.

Christopher Pissarides, a Nobel Laureate, and a professor at the London School of Economics, said in a recent interview that he expects that there could be a gradual tapering announced before the end of the year, taking us back to a situation where such unconventional measures are not used much.

All signs are now pointing to a strengthening and a broader recovery in the euro-zone, with bond yields suggesting that investors see an end to monetary stimulus in the near future. Members of the ECB, however, say that quantitative easing is not coming to an end in the short term.


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