ECB Hints at March Stimulus

ECB president Mario Draghi ignited the markets today with Hints at More Stimulus in March. 

 Investors reacted positively to Mr. Draghi’s comments Thursday, with eurozone equity markets moving higher in anticipation of further stimulus from the central bank. The euro fell against the U.S. dollar while government bond prices rose, another sign that investors expected Mr. Draghi to deliver fresh measures in March.

Speaking in a news conference, Mr. Draghi said the stimulus measures undertaken by the central bank since June 2014—and topped up most recently in December—had “strengthened the euro area’s resilience to recent, global economic shocks.”

But he added that fresh declines in oil prices suggest that the annual rate of inflation in 2016 is likely to be “significantly” below forecasts released last month.

Five Draghi Takeaways

Heading into the market close, there’s not much left of today’s rally. Crude has not even held the $30 level, but a half hour remains. 

The Wall Street Journal offers 5 Takeaways from Mario Draghi’s News Conference. My comments follow these takeaways. 

 [Draghi warns] inflation is the currency area is likely to be “significantly weaker this year than had been expected, and that consumer prices may even fall again in coming months. That means further action may be required, and as early as the governing council’s next gathering. “It will be necessary to review and therefore possibly reconsider our monetary policy stance at our next meeting in March,” said Draghi.

[In regards to the failure of the ECB to raise the inflation rate towards the central bank’s target of just under 2% from the 0.2% rate recorded in December, Draghi proclaimed] “We are not surrendering in front of these global factors. We will confirm our determination to continue to comply with our mandate even in face of adverse developments.” 

His final comment of the hour-long conference? “We don’t give up.”