ECB willing to act fast to boost inflation, says Draghi

Fri Nov 20, 2015 6:28am EST
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By John O'Donnell and Francesco Canepa

FRANKFURT (Reuters) - The European Central Bank is ready to act quickly to boost anemic inflation in the euro zone, its president said on Friday, offering the strongest hint yet that the bank will unveil fresh stimulus measures at its Dec. 3 meeting.

Mario Draghi highlighted changes to the ECB's asset purchase program and deposit rate as possible tools to stop inflation from falling further below its target of just under 2 percent.

Draghi said the risk had increased that the ECB would miss that target. "If we decide (on Dec. 3) that the current trajectory of our policy is not sufficient to achieve our objective, we will do what we must to raise inflation as quickly as possible," he told a conference in Frankfurt.

Draghi said the strength of the euro zone's recovery was modest and the global outlook for demand, particularly in emerging countries, had worsened significantly in recent months.

His views appeared likely to meet some objections on the ECB's decision-making Governing Council, which includes the bank's executive board members and the governors of the bloc's 19 central banks.

Speaking at the same event, the Bundesbank's president Jens Weidmann, one of the most prominent critics of the ECB's ultra-easy policy, struck a more upbeat tone on the economy and made the case for waiting before taking new policy steps.

"I see no reason to talk down the economic outlook and paint a gloomy picture," Weidmann said. "We should also not forget that the monetary policy measures already taken still need time to fully feed into the economy."

Following Draghi's comments the euro fell as low as $1.0664 and traded near three-month lows against sterling. It then recouped its losses to move back above $1.07.   Continued...

European Central Bank (ECB) President Mario Draghi exchanges views during a Monetary Dialogue with the European Parliament's Economic and Monetary Affairs Committee in Brussels, Belgium, November 12, 2015. REUTERS/Eric Vidal