European Central Bank President Mario Draghi said in a speech that he is open to stimulating monetary incentives if economic conditions in Europe are not improving. This may mean reducing interest rates or reviving a program of quantitative easing, which involves creating new money to buy assets such as government bonds. "In the absence of improvement, so the continued return of inflation to our target is jeopardized, additional incentives will be needed," he said in Sintra, Portugal.
They also sparked a reaction from Trump, who complained from social media that a weaker euro is "easier" for Europe to "compete with the US."
"They have slipped away with this for years, along with China and others," Trump told Twitter, citing Europe.
For Trump, the weakness of other currencies compared to the US dollar is often a source of frustration. The president has long argued that China devaluates its currency, the yuan, to make its exports more competitive.
At the same time, Trump has said he wants a weaker dollar. [1
Currency war? Jane Foley, senior currency strategist at Rabobank, said it was more attractive to raise Federal Reserve interest rates. While Trump "has no problem" with making statements aimed at weakening the dollar, such comments may be dangerous.
"Any economy that suffers from a prolonged influx of undesirably low inflation is likely to favor the weak currency," said Foley in a research note. "If several economies fall into the same boat by accident, the preconditions for currency warfare are set.
The currency war will show that countries competitively reduce their value in order to gain an advantage in trade
If the ECB reduces interest rates or resumes quantitative easing, it would be a dramatic change. he will leave the central bank in October, he recently hit a stronger tune.After the policy meeting two weeks ago he said the ECB would hold interest rates by mid-2020.
Draggy's comments seemed energetically cunning and stood in contrast to what he surrendered earlier this month, "FXTM Market Analyst Han Tan said in a note on Tuesday