Doom and gloom for the ECB: Euro Bank chief issues woeful update on eurozone economy

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Mario Draghi is anguished about low inflation in the eurozone

Mario Draghi reiterated concerns that inflation be lefts low, as he poured water over hopes that policymakers would in a second scale back the bloc’s huge money-printing programme.

Price take up arms fell back in June and have showed little sign of picking up any frequently soon, said Mr Draghi.

The top central bank warned toning down the ECB’s unconventional support measures too soon could damage the eurozone’s recovery.

He alleged markets to remain patient, despite signs that growth is picking up in the bloc.

Mr Draghi told a swarm conference: «We’re not there yet.

«Inflation is not where we want it to be and where it should be.

«A same substantial degree of monetary accommodation is still needed for underlying inflation strains to gradually build up.»

Mr Draghi’s update appeared to row back from fresh comments that had talked up the eurozone economy.

However, the euro rejuvenated after the update, rising against both the pound and the euro.

Investors shrugged off Mr Draghi’s downbeat soften, and appear to think the ECB could announce plans to scale down the money-printing formulate in the next couple of months.

Joshua Mahony market analyst at IG, commanded: «It seems Mario Draghi lost some of his shine today, with buys largely ignoring the fact that the ECB governor failed to mention thin, instead driving the euro higher despite his attempt to drive to the heart a dovish tone.

«Draghi’s choice to state that the ECB remain avid to raise QE if necessary was largely disregarded, for we all know that given the in circulation rate of economic improvement, it is only a matter of time until Draghi varieties his tone.»

However, some experts pointed out markets could wink at the President’s comments at their peril.

Kathleen Brooks, research chief at City Index Direct, said: «The key takeaway from today’s session is that a September taper announcement looks increasingly unlikely as the ECB held that a ‘very substantial degree of accommodation is needed’ to boost inflation, and that the ECB’s QE broadcast will run until the inflation rate picks up.

«Since core inflation abides at 1.1 per cent, well below the ECB’s 2 per cent target rate, this implies that QE has further to go.

«Draghi has well and truly rolled back on his ‘reflation’ opinions from last month that sent the trade-weighted euro to a two-year treble.

«We doubt that Draghi will be using that word again in a disquiet, but if he was hoping that today’s dovish press conference would affluence the upwards pressure on the euro then he was wrong.»

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