Normalisation of inflation could take longer than expected, Draghi says
News that European Central Bank president Mario Draghi believes the downside risks to the economy are clearly visible weighed on the single currency and pushed the prices of German government debt higher.
"Downside risks stemming from global growth and trade are clearly visible. Signs of a sustained turnaround in core inflation have somewhat weakened."
"While the recovery will gradually strengthen the impulse underlying the inflation process, the protracted economic weakness of the past years continues to weigh on nominal wage growth, and this could moderate price pressures as we move forward.
"From today’s perspective, this suggests that a sustained normalisation of inflation could take longer than we anticipated in March when we first appraised the overall impact of our measures," Mario Draghi said in prepared remarks ahead of his testimony before the European parliament's Economic and Monetary Affairs Committee.
Later in the same speech, Draghi added that the ECB "had always said" its programme of quantitative easing would run past end-September 2016 if it seemed that its inflation target of consumer prices below, but close to, 2% over the medium-term might be compromised.
As of 08:39 euro/dollar was 0.41% lower at 1.0713.