ECB’s Mersch Warns of Downside Risks, Affirms Rate Guidance

(Bloomberg) -- Risks to the euro area’s growth outlook are skewed to the downside because of concerns related to protectionism and emerging markets, European Central Bank Executive Board Member Yves Mersch said.

In a speech Saturday in Koenigswinter, Germany Mersch also re-stated the ECB’s recent macroeconomic projections and reaffirmed that the central bank intends to keep interest rates at their present level at least through the first half of 2020.

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The Frankfurt-based ECB is grappling with an economic slowdown and an inflation rate that remains entrenched below its target level. Policy makers raised the possibility of more easing at their June meeting, and since then President Mario Draghi has nudged the ECB closer to pumping more stimulus into the economy by highlighting that “lingering” risks were strengthening the case for action.

“A reliable strategy is an anchor for credible monetary policy,” Mersch said. “Erratic policy debates for the purpose of creating short-term stimulus risk undermining that credibility in the long run.”

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