European Central Bank President Mario Draghi reiterated on Tuesday that the bank will adopt a patient approach to tightening policy and stands ready to adjust all its policy tools when needed.

On June 14, the central bank decided to halve its monthly asset purchases to EUR 15 billion after September and to eventually stop them at the end of the year.

The bank also signaled that the interest rates will remain at their present levels through the summer of 2019.

"We will remain patient in determining the timing of the first rate rise and will take a gradual approach to adjusting policy thereafter," Draghi said in a speech at a central banking conference in Sintra, Portugal.

"The path of very short-term interest rates that is implicit in the term structure of today's money market interest rates broadly reflects these principles."

Euro weakened after the June 14 ECB announcement, which is in contrast to its sharp appreciation last year in response to Draghi's remarks in Sintra then that the bank was planning to wind down its massive EUR 2.5 trillion stimulus.

Draghi stressed again that "uncertainty surrounding the growth outlook has recently increased", mainly "the threat of increased global protectionism prompted by the imposition of steel and aluminium tariffs by the United States."

Rising oil prices due to geopolitical risks in the Middle East and the possibility for persistent heightened financial market volatility also add to the risks to the euro area growth outlook, Draghi said.

The ECB Chief said the bank saw positive signs regarding the inflation outlook, but uncertainty persisted.

Wages, a key concern for the central bank, are showing signs of sustained increase.

"Even if wages continue to rise as we expect, we cannot exclude that structural factors beyond the central bank's control might impede the transmission of wages into consumer prices," Draghi cautioned.

"What is key is that inflation expectations remain well anchored," he said.

"Overall, there is growing evidence that broad-based economic growth is beginning to generate positive pricing dynamics," Draghi noted.

by P2PNews Staff Writer

editorial@p2pnews.com

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