Draghi: ECB Will Act Quickly to Boost Inflation

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ECB frankfurt Germany
Frankfurt am Main, Hessen, Germany – April 19, 2015: EU flags at the entry of the new build of the Seat of the European Central Bank (ECB)

The European Central Bank has said on Friday that it is prepared to act quickly to boost inflation in the euro zone if necessary. The statement offered the strongest hint yet that the ECB will initiate fresh stimulus measures at its December meeting.

ECB President Mario Draghi noted changes to the banks deposit rate and asset purchase program as possible ways to prevent inflation from dropping even further below its near 2% target.

Draghi also stated that the euro zone was making a modest recovery, and the global outlook for demand has grown significantly worse in recent months.

The euro fell to a low point of $1.0664 after Draghi’s comments, but rebounded to $1.07.

The ECB has spent approximately 60 billion euros a month on primarily government bonds since March in an attempt to revive inflation. However, prices only increased 0.1% in October.

The markets were expecting the ECB to take further action in December. Investors are predicting that asset purchases will be extended and deposit rates will be cut even further. The bank will receive newly updated inflation forecasts at its December meeting, but has already stated that conditions have grown worse since the last estimates were published in the month of September.

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