Published: Wed, June 19, 2019
Markets | By Otis Pena

European Central Bank hints at more stimulus as global economy outlook dims

European Central Bank hints at more stimulus as global economy outlook dims

Eurozone inflation of 1.2% is below the European Central Bank's goal of just under 2%, considered best for the economy, while growth prospects are under pressure from uncertainty about issues such as the U.S.

Draghi's comments spurred talk that the Federal Reserve would also soon start easing monetary policy by cutting interest rates, with the U.S. central bank set to give its policy statement on Wednesday. "They have been getting away with this for years, along with China and others".

Global stock markets have rallied and retreated repeatedly in recent months in reaction to comments from Trump about progress - or lack of progress - in negotiating an end to the trade conflict.

"Draghi gave his clearest indication yet that we are looking at stimulus coming down the pipe and additional monetary dilution. Very unfair to the United States!" he added. Speaking at an ECB research conference in Portugal on Tuesday, Draghi said the bank would announce further stimulative measures if the economic situation does not improve.

The president's complaint against the European Central Bank echoed complaints he's made about China and Mexico - two countries he's threatened to get in trade wars with because of his belief the at a competitive disadvantage with them.

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President Donald Trump said on Tuesday he would have an extended meeting with Chinese President Xi Jinping at the Group of 20 summit later this month, raising hopes they can ease tensions in a trade dispute that has damaged the world economy.

At a speech in Sintra, Portugal, Draghi said the European Central Bank could still cut rates, adjust its guidance, offer mitigating measures to counter the unwanted side effects of negative rates, and also had "considerable headroom" for more asset purchases. Fed Chairman Jerome Powell will hold a news conference on Wednesday, shortly after the release of a policy statement.

Trump told ABC News last week that the USA market would be stronger 'if we had a different person in the Federal Reserve who wouldn't have raised interest rates so much'. The negative interest rates push retail banks into lending out more money, thus stimulating the economy and boosting inflation.

More drama? Asked by reporters outside the White House yesterday if he wanted to demote Powell, Trump said "let's see what he does".

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