Draghi reminds of central bank’s readiness to act

European Central Bank (ECB) president Mario Draghi, speaking in Brussels, once again reminded the market that ECB is unlikely to sit by, instead stands ready to act to push inflation higher.

Comments can be said to be pretty dovish -

• According to Mr. Draghi, downside risks from global growth and trade are clearly visible and according to latest ECB projection, inflation dynamics have weakened. (Dovish comments, signaling further action in December).
• Comments were very dovish on inflation front. According to ECB, prices pressure from producer price inflation is very subdued and signs of sustained turnaround in core CPI has somewhat weakened.
• However, like most other central banks', ECB too thinks lower inflation is due to stronger Euro, earlier this year and lower energy prices.

Comments regarding ECB's readiness were pretty firm -

• According to Mr. Draghi, ECB will act with all instruments available, within mandate if the governing council concludes that medium term price objective is at risk.
• Mr. Draghi pointed that in its comments and forward guidance the bank has always mentioned that the purchase may go beyond September 2016, if inflation path fails to adjust in line with ECB mandate. (Is this a clearer hint that asset purchase to be extended).

Euro/Dollar is however proving to be a tough customer at the moment, after initial drop below 1.07 mark on the comments, Euro is back trading above. Currently at 1.071 against Dollar.