Draghi Says Economy Weaker Than Expected Amid Global Uncertainty

(Bloomberg) -- Soft economic data in the euro zone underline the continued need for European Central Bank stimulus, according to President Mario Draghi.

“Recent economic developments have been weaker than expected and uncertainties, notably related to global factors, remain prominent,” Draghi told members of the European Parliament in Strasbourg. “A significant amount of monetary-policy stimulus is still needed to support the further build-up of domestic price pressures and headline inflation developments over the medium term.”

The euro fell after the speech was published and was down 0.6 percent at 5:35 p.m. in Frankfurt, trading at $1.1397.

The ECB president made his first public appearances of the year on Tuesday, shortly after a report showed that Germany only narrowly dodged a recession in late 2018, and posted the weakest annual growth in five years. Earlier in the day, Draghi marked the 20th anniversary of the euro with a call for more reforms. He will speak again later this evening.

A spate of weak data from across the 19-nation euro area in recent weeks has led investors to question whether the central bank will be able to start raising interest rates this year after it halted its bond-buying program at the end of December. The Governing Council holds its next policy meeting on Jan. 24.

“A well-equipped toolbox, comprising both standard and non-standard instruments, has proven indispensable in conditions where monetary-policy transmission is impaired or where space for interest rate cuts is limited,” Draghi said.

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