Four sources at the meeting said that European Central Bank policymakers on Thursday agreed to shed light on the value of the euro, believing it was in line with broader economic fundamentals and a "currency war" with the United States. Afraid of any sign of
ECB President Christine Lagarde said the
exchange rate has been widely discussed and will be closely, monitored.
Four sources in the ECB's governing
council said policymakers had acknowledged the negative effects of the euro's
strength on inflation and growth. But he said the general agreement was that it
reflected a better economic situation on the European side of the Atlantic and
expected a easier policy stance from the US Federal Reserve.
He cited growing confidence in the
currency bloc of 19 countries following the joint response to the epidemic, as
well as the uncertainty ahead of the November US presidential election -
another argument against currency haste.
"We are not indifferent to this
(exchange rate) but we are not ready to start a currency war on it," a
source said.
Speaking after the meeting, the two
sources said they saw $1.20, which is not far from the current exchange rate.
An ECB spokesman declined to comment.
A source said the governors differed from
an economic point of view, with people from basic economies such as Germany,
France and the Netherlands cheering, while their southern European counterparts
were more frustrated.
The sources added that Philip Lane, the
ECB's chief economist, was seen’ as a middle ground acquisition.
Sources said that policymakers at the
meeting considered adopting the language used to stop the previous rally of the
euro, when then-ECB President Mario Draghi described the "exchange rate
fluctuations" as "non-existent". The source of the certainty.
"
But he decided to use milder terms, saying
in a preliminary statement that the governing council would "carefully
assess the information coming in, including developments in the exchange
rate".
Sources say governors still expect to
update the ECB's policy stance by the end of the year, with its Emergency
Procurement Program (PEPP) now being the tool of choice. As seen, there has
been no discussion about interest rate cuts.
Some also said that the ECB should take
into account the Fed's new strategy, which has seen it target the average
inflation rate in unpredictable years. Adjust yourself as part.
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