ECB signals monetary easing to a two-year low against the dollar

Markets were signaled for more easing after the European Central Bank meeting on Thursday. This caused the euro to drop shortly against the greenback to a two-year low. 

They mentioned keeping the interest rates unchanged at the current level since the previous statements at least until the first half of 2020. This shows the possibility of a rate cut in the future. 

Also, ECB President Draghi said during a Thursday press conference that the monetary stimulus is needed to a “significant degree” in order to guarantee good financial conditions and support the growth of the eurozone, with which all of ECB members agreed on. Nonetheless, he said that difference in opinion is already expected in a “complex” situation such as this. 

Additional measures are called for to stimulate the eurozone. The central bank is also assessing options “such as the design of a tiered system for reserve remuneration and options for the size and composition of potential new net asset purchases.” 

They may lower the fees to be paid by the banks to have excess money or consider a quantitative easing program in the next few months. To boost lending and inflation, quantitative easing or more asset purchases of government bonds from the eurozone are also probable options. 

After ECB’s statements, the euro reached a two-year low at 1.1103. On the other hand, German 30-year bond yields reached a record low of 0.167%, based on the research data of Refinitiv. 

Although, Draghi said that the possibility of a recession is low in the given area and provides mixed messages compared to the previous one. Consequently, the currency pushed the pair even higher after reaching 1.1153 mark at past two in the afternoon (London time).