The European Central Bank must take into account the weakening of inflation due to the strong euro as it prepares to wind down its unprecedented stimulus programme, says ECB chief Mario Draghi. He was speaking after the ECB kept rates at record lows and confirmed that asset purchases would continue at 60 billion euros ($71.76 billion) per month at least until December. Sonia Legg reports.
Many thought he'd at least signal the start of an intent to claw back bank stimulus but it wasn't to be. (SOUNDBITE) (English) MARIO DRAGHI, PRESIDENT OF THE EUROPEAN CENTRAL BANK, SAYING: "We confirm that our net asset purchases at the current rate of 60 billion euros are intended to run until the end of December 2017, or beyond, if necessary." Inflation's the problem - the euro's 13 percent gain against the dollar this year has held it back. (SOUNDBITE) (English) MARIO DRAGHI, PRESIDENT OF THE EUROPEAN CENTRAL BANK, SAYING: "The recent volatility in the exchange rate remains a source of uncertainty which requires monitoring with regard to its possible implication for the medium-term outlook for price stability." (SOUNDBITE) (English) BGC PARTNERS MARKET STRATEGIST, MIKE INGRAM, SAYING: "The most recent CPI data for the euro zone, the headline rate was indeed a little bit higher than was expected. It went one point three to one point five percent. But if you look at core inflation, only one point two percent." But the questions to Draghi came fast and furious. (SOUNDBITE) (English) REPORTER ASKING QUESTION, SAYING: "The euro zone might enjoy a growth rate of 2.X percent which is the highest growth rate we have had since 2007 but still the monetary policy is more lose than during the financial crisis." (SOUNDBITE) (English) MARIO DRAGHI, PRESIDENT OF THE EUROPEAN CENTRAL BANK, SAYING: "We don't have a dual mandate like the Fed, where we can also look at conditions of unemployment in the labour market. We only have one mandate which is price stability and price stability for us is defined as a level of inflation that is close, but below, 2 percent which should be reached in a self-sustained and durable fashion and we are not there yet." But then Draghi confirmed ECB staff were looking at how to wind down the buying programme. That sent the euro past £1.20 and halved the gains European stocks had made earlier in the day. The one certainly now - October's meeting has become even more interesting.