European Central Bank President Mario Draghi says inflation pressures in the 19-country eurozone “remain subdued.”
Thursday’s remark at the ECB’s monetary policy meeting is a sign that the bank is determined to maintain its monetary stimulus programs at least through the end of the year.
Inflation has jumped to 1.1 percent in December in the eurozone, but that was mainly due to an increase in fuel prices, not underlying demand for goods.
Draghi said there was “no sign yet” of a convincing upturn in inflation. Excluding fuel and other volatile items, inflation remains stuck around 0.8 percent-0.9 percent. That’s still far below the ECB’s goal of just under 2 percent.
The ECB earlier decided to keep its interest rates and stimulus programs on hold.
Draghi said it’s “early” to comment on Donald Trump’s remark that the dollar is “too strong” – but recalled the commitments countries made as part of the G-20 group of nations not to devalue their currencies to get trade advantage.
Draghi said there was “a strong international consensus in the G-7 and the G-20 to refrain from competitive currency devaluations.”
A weaker currency can help a country’s exporters in the international marketplace. The dollar’s recent rise has raised concerns it may hurt US exports.
Draghi said it was “very early” to comment on any statements by President-elect Trump.
Trump made the remark earlier this week in an interview with the Wall Street Journal.
The head of the ECB also said the central bank is not anywhere near withdrawing its stimulus programs aimed at supporting the economy.
Draghi said that bank officials “didn’t discuss tapering” the stimulus program at Thursday’s meeting. When the time comes, there will need to be “a very deep and careful analysis,” he said, “but we are not there yet.
Draghi spoke after the bank kept its key interest benchmark at a record low of zero, and left untouched its December decision to keep purchasing government and corporate bonds until the end of the year. The bond purchases pump newly created money into the economy.
Inflation has recently jumped to 1.1 percent in the 19 countries that use the euro, closer to the bank’s goal of just under 2 percent. But core inflation – which excludes volatile fuel and food prices – has been stuck at 0.8 percent-0.9 percent, and higher prices are not being reflected in wages.
Wolfgang Schill retirement
A US-educated economist has been named to a high-ranking position at the European Central Bank.
The ECB said Thursday that Frank Smets, 53, was appointed to the post of director general for economics, or the top staff economist.
He reports to Peter Praet, the member of the bank’s six-member executive board responsible for economics and preparing decisions on monetary policy for submission to the governing council.
Smets, a Belgian national, has a Ph.D. from Yale University. He has been with the ECB for 18 years and previously served as an advisor to the bank’s president and as head of research.
Smets succeeds Wolfgang Schill, who retires after 12 years in the role.