Draghi sees prospect of more ECB stimulus amid weak inflation

Bloomberg

Mario Draghi nudged the European Central Bank (ECB) closer to pumping more monetary stimulus into the economy, highlighting that “lingering” risks are strengthening the case for action.
The ECB president said at the institution’s annual forum in Sintra, Portugal, that “additional stimulus will be required” if the economic outlook doesn’t improve. He said the commitment to keeping interest rates low could be bolstered, further cuts remain “part of our tools,” and renewed asset purchases are an option even if that means raising self-imposed limits on how much it can buy.
It’s the latest dovish comment from the Governing Council, which is grappling with an economic slowdown and an inflation rate that remains entrenched below its goal. Draghi said risks from geopolitical factors, protectionism and vulnerabilities in emerging markets haven’t dissipated and are weighing in particular on manufacturing.
Major central banks aro-und world are already moving back into battle mode as trade tensions hit confidence and damp the global economy. The US Federal Reserve, Bank of England and Bank of Japan all hold policy meetings this week, which should give further insight into their concerns.
Investors are betting on US interest rate cuts later this year, while central banks in Australia, Russia, India and Chile have already loosened policy.
In a sign that discussions on policy action are becoming more formal within the ECB, Draghi said the Governing Council will review in the coming weeks how their tools can be adapted “commensurate to the severity of the risk to price stability.”
The ECB is readying for action as a slump in manufacturing, particularly in Germany, threatens to spread to other parts of the economy.