‘Draghi pouring water on expectations of reducing monetary stimulus, that saw the euro then start to weaken.’ – Douglas Borthwick, Chapdelaine Foreign Exchange
The European Central Bank President Mario Draghi reported on Tuesday that in order to overcome Europe’s income inequality authorities should focus more on education, innovation and investment in human capital. According to the ECB President inequality in the Euro zone grew markedly since the last global financial crisis. Thus, governments should consider adopting policies aimed at redistributing wealth. According to data from Eurostat, the inequality level has increased sharply since the crisis in countries like France and Spain. The highest level of income inequality has been registered in Greece, Spain and Portugal. Apart from that, Mario Draghi said that ultra low interest rates helped to boost job creation, economic growth and benefit borrowers. Moreover, the ECB President said that a faster pace of monetary policy tightening would likely lead to a new wave of recession and boost income inequality in the region. Following these dovish comments, the US Dollar hit its one-month high against the Japanese Yen and rebounded sharply against the Euro, as the probability of a monetary policy stimulus reduction diminished.
