The European central bank’s boss Mario Draghi has moved to end speculation about monetary policy and an impending ECB interest rate cut.
Analysts have been increasingly forecasting rate cuts this year, but Draghi says there are no signs inflation is strong enough to warrant tightening policy yet.
“Before making any alterations to the components of our stance – interest rates, asset purchases and forward guidance – we still need to build sufficient confidence that inflation will indeed converge to our aim over a medium-term horizon, and will remain there even in less supportive monetary policy conditions,” he said.
Draghi has had to make the announcement because many policy makers and national bank heads around Europe have been saying the opposite in recent weeks, aned indicating they wanted rates to rise.
One immediate consequence of Draghi’s speech was a fall in the euro, but analysts point to a swathe of figures indicating Europe’s economic upturn is strengthening without a corresponding surge in inflation.