It’s not over. Do you hear?? European Central Bank (ECB) is not done with easing.

European Central Bank’s (ECB) executive board member Peter Part in an interview with La Republica, published today, said that ECB has yet to reach physical lower bound in case of interest rates, which basically means further rate reduction is possible from the central bank –

“This re-composition of the tool-box does not mean that we have thrown away any of our tools. If new negative shocks should worsen the outlook or if financing conditions should not adjust in the direction and to the extent that is necessary to boost the economy and inflation, a rate reduction remains in our armory.”

Let us add some salt here 

• While many will try to make believe that this statement contradict Mario Draghi’s monetary policy statement… well it doesn’t. Mr. Draghi said, governing council do not anticipate further actions to be necessary…..that doesn’t mean they won’t act if necessary.
• Mr. Draghi said, there is a limit to negative rates, what Mr. Paret clarified current -0.4% may not be it.

When, Euro went up around 400 pips from low, despite ECB package, many cited Draghi’s no further cut comments as responsible, Mr. Paret’s comments are probably to reduce damage.

However one clarification is that – Dollar is weak, which has been major driving force behind EUR/USD.

Let’s make it a little complex 

Mr. Paret’s comments probably to weaken the part of Euro that is not strong due to weakness in Dollar.

Euro is little down, trading at 1.127 against Dollar.