ECB's Praet hints at further stimulus

Peter Praet, the European Central Bank (ECB) chief economist, reiterated the central bank was willing to implement fresh stimulus measures to boost inflation.

Speaking on Thursday at Europe’s finance week, Praet said interest rates remained part of the “toolbox” the ECB can use to revive subdued inflation, fuelling expectations Brussels policymakers will cut deposit rate at the ECB meeting in December.

Praet indicated the Eurozone’s cyclical recovery was fragile and that risks to the downside was prevailing in the 19-country bloc because of subdued price pressures.

"It's always a question of saying, this is our objective: we are able to act, we are willing to act [...] we have no constraints," he said.

“Inflation expectations have only partially regained the values that would indicate a rapid and sustained adjustment in the path of inflation to levels closer to 2%.”

The ECB economist added that while the ECB had implemented a looser monetary policy, the real economy was yet to fully reapt the benefits as a number of external factors, such as a slowdown in the global economy, had made the financial environment more challenging.

"The transmission of financial conditions to inflation has taken longer than we anticipated due to new forces that have pulled in the other direction, in particular in the global economy,” he said.

"In addition, other factors in the economy continue to drag on the recovery.

“Those include the lingering debt overhang in the public and private sectors and the weakness of the institutions in the euro area to deal with that debt overhang.”