Draghi Primes ECB Easing That Will Test Global Currency Defenses

European Central Bank President Mario Draghi will test the composure of global policy makers this week as he unleashes a barrage of stimulus to shore up economic growth.

The monetary easing will probably feature the centerpiece of an interest-rate cut that widens the difference between borrowing costs in the euro area and elsewhere. That will potentially affect foreign exchange markets — and risk the ire of critics such as Donald Trump.

While Draghi has a mantra ready that his institution strives for price stability and doesn’t target the euro, that won’t stop the U.S. president or others from accusing the ECB of fighting a “currency war,” a termed coined by former Brazilian finance minister Guido Mantega. Trump has a history of citing the weakness of the euro when piling pressure on the U.S. Federal Reserve to cut its own rates.

 

https://www.bloomberg.com/news/articles/2019-09-09/draghi-primes-ecb-easing-that-will-test-global-currency-defenses?srnd=economics-vp

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