La European Central Bank could review and possibly modify its stimulus policies to the economy to the Governing Council of March, when the new economic forecasts of the Frankfurt technicians will be available. The board is unanimous on this point. This was announced by the president of the ECB, Mario Draghi, in the press conference at the end of the Council meeting which he confirmed today Eurozone interest rates at historic lows. “We have the power to act and the determination to do so – continued the Eurotower number one – e we have no action limits to reach our inflation target, which is below but close to 2%. We have a lot of tools at our disposal, even if today we didn't discuss which ones we could use in particular”.
Referring to the recent collapses in Piazza Affari, “Italian banks have provisions similar to those in the euro area and also have a high level of guarantees and collateral. The questionnaire is addressed to various European banks, not just Italian ones. It's about an investigation into the management of non-performing loans and the aim is to know the different national practices to determine which are the best. It is not an initiative that will push the banks to take measures in the short term. The behavior of the markets is related to confusion that there is on this point and I hope that this clarification will help”. In short, the ECB will not ask for new provisions or further capital raisings in addition to those that had already been advanced in the overall assessment of the sector carried out in 2015.
In general, "we constantly monitor the markets and the financial sectors, including the banking sector - Draghi said again -, to understand if in some way monetary policy, ours as well as that of other central banks, could become a source of financial instability and so far we have not found any signs pointing in this direction. Obviously our mandate is to achieve price stability and not bank profitability, but we know that to return to growth and price stability stability in the financial sector and the banking system is also needed. The best response to financial market tensions is to ensure that the banking sector is resilient and I am confident that all the measures taken, both in Europe and around the world, have produced a much stronger sector than it was before the crisis”.
As for rates, "we have decided to keep them unchanged and we expect them to remain unchanged for a protracted period of time", added Draghi, underlining that the risks of weakening economic growth in the Eurozone have increased at the beginning of the year, especially those related to market volatility and those of geopolitical nature.
The prospects of inflation for the euro area, continued Draghi, they are today "significantly lower" than those reported in the ECB's economic forecasts last December and the Governing Council expects the cost of living to remain "very low or negative in the months to come". to then "go back only further in 2016". In this context, added the President of the ECB, it is necessary to "carefully monitor the risks of secondary effects" of low inflation, i.e. the possible repercussions on wage dynamics and general expectations.
Meanwhile, theeuro it weakened and is trading against the dollar at 1,079% (-1,0%). The BTP-Bund spread, which before Draghi's words was traveling above 110 basis points and which had scored a maximum of 120,17 points in the morning, between 14.30 and 15.00 quickly fell back in the area 99-100 basis points, reaching a minimum of 98,84, XNUMX points. The Bags, on the other hand, during the speech of the President of the ECB they had a flare (Milan +4%), to then retrace slightly, however reinforcing the rebound started in the morning: Piazza Affari +2,4%, Frankfurt +2,1%, Paris +2,2%, London +1,4%.
