ECB’s Praet tries to calm taper tantrum
Euro zone inflation “crucially contingent” on low borrowing costs
European Central Bank chief economist Peter Praet said Tuesday that an easy monetary policy was needed for continued recovery in euro zone inflation.
The comments come after investors interpreted comments from ECB President Mario Draghi last week as a signal that the bank would start tapering stimulus.
“The baseline scenario for future inflation remains crucially contingent on very easy financing conditions which, to a large extent, depend on the current accommodative monetary policy stance,” Praet said at the event in Rome.
The earlier Draghi comments sparked a rally in the euro and a bond selloff, prompting policy makers to try and temper expectations. Some officials are reportedly nervous about signaling policy change at the July 20 meeting coming up.