Draghi warns over acting too late on inflation

European Central Bank chief Mario Draghi warned on Thursday that acting too late on low inflation was more risky than acting too early.

Speaking at a conference at the Bundesbank, Draghi said: “Adopting a wait-and-see attitude and extending the policy horizon brings with it risks: namely a lasting de-anchoring of expectations leading to persistently weaker inflation.

"And if that were to happen, we would need a much more accommodative monetary policy to reverse it.”

Draghi added that seen from that perspective, the risks of acting too late outweigh those of acting too early.

“Draghi put on his best Braveheart impression as he said that he would not surrender to low inflation without stating what or when new measures would be put in place. That’s the big piece of news that the global markets want to hear, and it would also have helped out Mark Carney who is due to give press conference with the BoE rate announcement later today,” said James Hughes, chief market analyst at GKFX.

“Speculation will grow on a move to take more rates negative by the ECB, and expectations are growing that we could well see more movement at the March meeting.”