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Mixed Consumer Confidence Figures Out Of Eurozone.

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Mario Draghi’s economics retreat is continuing in Portugal today in the midst of mixed consumer confidence figures out of a couple of large Eurozone economies. France earlier reaffirmed an April Consumer Confidence number of 85 showing no change on the previous month as anticipated by the markets. Italy has posted a slight increase to it’s April Consumer Confidence figure, the reading this morning was 106.3 as compared to 105.5 in March and the market anticipated reading of 105.0.

The European Central Bank (ECB) President gave a speech yesterday entitled ‘Monetary Policy in a Prolonged Period of Low Inflation’. The prime tenet of Draghi’s talk was that the ECB must and will remain vigilant to the prospect of a negative spiral taking hold of price growth, he however qualified this with the comment that the Bank was not expecting inflation to remain low for too much longer.

Draghi went to note that should exchange rate or other market conditions cause an unwarranted tightening of monetary conditions then the Bank is prepared to further adjust it’s conventional instruments. It has too be pointed out that with the various interest rates at or near zero there is very limited scope for further adjustment here.

In response to concerns from economists that any further monetary easing will not have any meaningful effect due to individual banks hoarding cash, Draghi hinted that the ECB’s Long Term Lending Facility (LTRO) could be ramped up. This would in effect enable banks, particularly those in the periphery nations, continue to repair their balance sheets while at the same time removing the artificial credit restrictions that have been imposed by these institutions.

Draghi completed his speech by noting that quantitative easing is still ‘an option’ but it is by no means certain whether it will be used. The conference continues today and markets will be watching Draghi’s wrap up speech later with much enthusiasm.

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