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Markets Incorrectly Interpreted Draghi Comments

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European Central Bank President Mario Draghi intended to signal tolerance for a period of weaker inflation, not an imminent policy tightening, when his comments sent the euro higher this week, sources familiar with Draghi’s thinking said on Wednesday.

The ECB declined to comment.

Draghi’s comments on Tuesday, taken as a hawkish swing, sent the euro and bond yields sharply higher.

The sources said Draghi wanted to acknowledge the recent, strong economic data and prepare the market for an autumn decision on the future of the ECB’s 2.3 trillion euros bond-buying programme but without making any commitment.

Reuters

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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