Draghi Hints That ECB Confidence in a Euro-Area Pickup Is Fading

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So much for the “soft patch.”

Mario Draghi said Wednesday that the current slowdown marring the euro area could run on through 2019, a possible acknowledgement that the European Central Bank’s confidence in the chance of a second-half pickup is dwindling.

“Governing Council members are acknowledging the weakening of the cycle, the weakening of the economy, the fact that this weakening will extend into rest of the year,” the ECB president said about the latest policy meeting in Frankfurt.

The euro fell during Draghi’s remarks and was down 0.2 percent to $1.1243 as of 4:05 p.m. Frankfurt time. German bonds rose, pushing the 10-year yield further below zero.

Draghi also said that the Governing Council hasn’t completely given up hope, though it’s ready to act as needed if the situation worsens.

“They acknowledged also the underlying strength of the economy, the fact that some of these temporary factors are unwinding,” he said. “So, it was a meeting where the main goal was to reassert the readiness to act if the contingencies would warrant so.”

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