ECB’s Draghi Hints at Possible Winding Down of Eurozone Stimulus
Tuesday, June 27, 2017 at 10:57PM
Silver Prices

Central bank chief stresses that any exit from stimulus would ‘have to be made gradually’

SINTRA, Portugal—The euro soared to its biggest one-day gain against the dollar in a year and eurozone bond prices slumped after European Central Bank President Mario Draghi hinted the ECB might start winding down its stimulus in response to accelerating growth in Europe.

Any move by the ECB toward reducing bond purchases would put it on a similar policy path as the Federal Reserve, which first signaled an intent to taper its own stimulus program in 2013. But the ECB is likely to remain far behind: The Fed has been raising interest rates gradually since December 2015, while the ECB’s key rate has been negative since June 2014.

Mr. Draghi’s comments, made Tuesday at the ECB’s annual economic policy conference in Portugal, were laced with caution and caveats. But investors interpreted them as a cue to buy euros and sell eurozone bonds, a reversal of a long-term trade that has benefited from the central bank’s €60 billion ($67.15 billion) of bond purchases each month.

“All the signs now point to a strengthening and broadening recovery in the euro area,” Mr. Draghi said.

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Dollar drops as Euro gains and gold improves......

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