By Yasin Ebrahim
Investing.com – The euro struggled Thursday after the minutes of the European Central Bank signaled further stimulus in the not too distance future amid an uncertain outlook.
fell 0.03%, to $1.1756.
“The outlook remained surrounded by high uncertainty and the balance of risks continued to be tilted to the downside,” the ECB said in its accounts of the September meeting.
The tone of members in the September meeting was in contrast somewhat with ECB President Christine Lagarde’s optimistic take on the euro-area economy.
At the conclusion of the meeting, Lagarde talked up the recovery as the central bank raised its growth forecasts for the euro area.
Incoming data pointed to a “strong rebound in activity broadly in line with previous expectations,” Lagarde said.
But the ECB account of the meeting showed that members preferred the bank to remain flexible on policy and had concerns about the pace of inflation.
“Close monitoring of inflation expectations remained warranted, since there was a clear risk that the negative shock to the path of inflation as a result of the pandemic could give rise to a renewed downward trend in inflation expectations,” the account showed.
Members were also in favor of “keeping a ‘free hand’ in view of the elevated uncertainty,” and stressed the need to “carefully assess all incoming information, including the euro exchange rate, and to maintain flexibility in taking appropriate policy action if and when needed.”
“[W]ith a risk of a double-dip recession in the eurozone towards the end of the year […] we expect the ECB to increase QE, focusing on PSPP, the public sector purchase programme, instead of continuing PEPP, its emergency pandemic response,” ING said in a note.
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