Euro’s Rally Threatens to Make Draghi’s Inflation Headache Worse

(Bloomberg) -- The euro’s rally since the European Central Bank’s meeting may be putting President Mario Draghi in a bind.

The common currency is on course for its best week since August as central banks around the world signal their intentions to ease policy, while the ECB has few tools of its own to do so. That rally, though, may further damp inflation expectations by reducing import costs, escalating Draghi’s credibility challenges if it pushes price increases too far below the bank’s target of around 2%.

The currency has surged 1.5% this week, headed for the biggest five-day gain in nine months.

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