2017.09.2600:16:00UTC+00ECB’s Draghi Cautions Against Rushed Policy Decisions

While the European Central Bank is increasingly becoming confident that inflationary pressures will rise back to its target, ECB President Mario Draghi said that patience is still required until it is confirmed that the economic recovery lasts.

Draghi pointed out currency volatility as a source of uncertainty that needed monitoring and argued that a significant level of ECB accommodation is still needed, as a premature and rushed move could undo all its effects.

With the euro area's economy now expanding for the 17th consecutive quarter, the central bank is seen to taper its stimulus program beginning next year, despite inflation outlook remaining below ECB's 2 percent target for years to come.

The debate among market participants now is with regards to the details of the policy shift. There are questions whether the ECB would retain its QE program open-ended or whether it would announce its intention to exit from bond purchases. However, any change announced by ECB is seen to be minimal, as majority of policymakers are pushing for a gradualist strategy to stop the euro from appreciating too much.