Draghi presents a double-whammy of pessimism

3rd September 2015 By: Ranko Berich

ECB Press Conference – 03/09/15

Today’s ECB press conference was unambiguously dovish and barring a sudden pick-up in inflation, further easing action now looks likely.

Draghi presented a double-whammy of pessimism, with additional downside risks from recent market volatility adding to the already downgraded growth and inflation forecasts.

Should we see the very real risks of free-falling commodity prices and a weakened growth outlook begin to weigh down on inflation prospects, Draghi has shown his intention to act by altering the duration, composition, or size of QE. Unless some upside price pressure materialises, the ECB will be forced to follow the Fed and Bank of Japan in a second QE programme.