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ECB fears euro strength, geopolitical tensions, inflationary pressures

ECB fears euro strength, geopolitical tensions, inflationary pressures

Mubasher: The European Central Bank (ECB) has expressed fears over growing trade disputes between the US and China and their potential impact on the region’s economy.

ECB policymakers also showed concerns over the euro's strength, noting that broad agreement is not enough evidence for sustained inflation, according to the ECB’s minutes of meeting released on Thursday.

Monetary Policy Committee (MPC) members further discussed the potential removal of some monetary stimulus, pointing out that normalisation should not be misunderstood.

The minutes also showed that policymakers disagreed on the date for ending the quantitative easing programme as well as the economy’s ability to continue growth amid current inflationary pressures.

“It was remarked that the recent movements in the euro exchange rate seemed to relate more to the relative monetary policy shocks and less to improvements in the macroeconomic outlook. This suggested that the exchange rate appreciation could be expected to have a more negative impact on inflation,” the minutes showed.

The ECB is currently buying bonds at EUR 30 billion per month. This pace is scheduled to continue until September.

The bank previously said it would not hike interest rates until well after the end of the bond purchases programme.

By 03:59 pm GMT, the EUR/USD pair slipped by around 0.4% to $1.2318.