Euro falls against the dollar: Draghi comments spook FX and equity desks in early trading

 
Oliver Gill
Follow Oliver
European Central Bank Press Conference
Mario Draghi spoke in Frankfurt at 8am today (Source: Getty)

The euro dropped in early trading after European Central Bank (ECB) president Mario Draghi said he had no plans to increase interest rates any time soon.

Draghi spoke at the "ECB and its watchers" conference in Frankfurt as markets opened this morning.

His comments also had a knock-on impact on equity markets with leading European indices falling over 0.5 per cent.

Read more: Fall in Eurozone inflation boosts dove Draghi

He said the current policy of negative interest rates is appropriate and there is no consideration being put to making adjustments at this time.

The euro fell as much as 0.3 per cent against the dollar as Draghi started his speech, before easing back to be down 0.2 per cent to around 1.064.

Draghi said: "Before making any alterations to the components of our stance – interest rates, asset purchases and forward guidance – we still need to build sufficient confidence that inflation will indeed converge to our aim over a medium-term horizon, and will remain there even in less supportive monetary policy conditions."

The ECB president said current monetary policy has been pivotal to eurozone economic resilience in recent years.

"And this is despite the fact that we have encountered adverse shocks in that period, not least the slowdown in emerging market economies and renewed tensions in the euro area banking sector."

Read more: Eurozone leaders want Dijsselbloem to step down over "xenophobic" remarks

Meanwhile, Draghi said that while greenshoots are appearing in terms of a recovery, "risks still remain tilted to the downside".

He continued: "Though fiscal policy has stopped being a headwind – as it was during the 2011-13 period – it has not been much of a tailwind to the recovery either", adding that continuing momentum was dependent on controlling inflation dynamics.

Before making any alterations to the components of our stance – interest rates, asset purchases and forward guidance – we still need to build sufficient confidence that inflation will indeed converge to our aim over a medium-term horizon, and will remain there even in less supportive monetary policy conditions.

Related articles