Earlier, Lagarde said the ECB was ready to implement more monetary stimulus to help the eurozone’s economic recovery.
This week, the euro recovered, gaining 0.90 percent and snapping a two-week losing streak.
Recently, the president of the European Central Bank, Christine Lagarde, hinted at a possible change in the bank’s inflation target, commenting that, given the current low inflation, the concerns facing policymakers are different. This requires a change in the bank’s current monetary policy strategy, which would strengthen the capacity of the bank’s monetary policy to stabilize the economy when faced with the lower bound.
Earlier, Lagarde said the ECB was ready to implement more monetary stimulus to help the eurozone’s economic recovery.
“The ECB stands ready to adjust all its instruments, as necessary, to ensure that inflation moves towards its target in a sustainable manner, in line with its commitment to symmetry,” she said.
Lagarde also linked the deflationary forces to the late appreciation of the euro, which has appreciated since May despite losing ground last month. She said the bank will continue to monitor the euro‘strength, although it did not hint at any possible intervention in the foreign exchange market.
The number of corona virus cases is currently increasing in Europe, with 5,042,794 reported cases (including Russia) and 222,765 total deaths. In the Eurozone, Spain leads the number of infected, with 769,188 total cases, as well as 31,791 deaths, followed by France, Great Britain and Italy.
Fears of a second wave are growing, given the rise in cases in countries such as Spain, Germany and France. Governments are already announcing measures to curb the spread of the virus, for example, German Chancellor Angela Merkel announced the government’s plan to act regionally this time, with the aim of avoiding another national lockdown, while the UK government decided to introduce a curfew in pubs, bars and restaurants, a move that was heavily criticized by representatives of the leisure sector.
Markets learned on Monday that services sentiment came in at -11.1 in September, an improvement from -17.2 the previous month and significantly better than what analysts had expected, as they forecast it to be at – 15.3. In line with analysts’ expectations, consumer confidence was -13.9, improving from August’s -14.7, while industrial confidence was -11.1, below analysts’ expectations of -9.5 , but better than the August figure, which was -12.8. Business sentiment was at -1.19, improving from August’s -1.34 and better than the -1.38 that analysts had expected.
Markit Economics released a manufacturing PMI for September on Thursday, which came in at 53.7, signaling an expansion in the manufacturing sector and unchanged from the previous month’s report.
Eurostat confirmed that Europe is now facing deflationary pressures, as the producer price index managed to decrease by 2.5 percent in August (year-on-year) after falling by 3.1 percent in the previous month. Polled analysts expected it to decrease by 2.7 percent. On a monthly basis, the producer price index rose by 0.1 percent in August, remaining in line with analysts’ expectations and below the previous month’s figure of 0.7 percent.
The level of unemployment rose slightly in August, to 8.1 percent, in line with the expectations of the surveyed analysts and compared to last month’s 8 percent.