2014.07.0803:20:25UTC+00Analysts want ECB to weaken euro with QE

The central bank of the eurozone is being put under increased pressure by various parties to consider quantitative easing in its policy to not only tackle inflation, but to also address an unusually strong currency.

“Excessive” was the term Airbus’ chief executive Fabric Bregier used to describe the euro’s current exchange rate with the US dollar of $1.35 that has led to significant exposure to similar companies who employ both currencies in their operations. Bregier’s perspective adds to the increasing amount of arguments that are calling for the European Central Bank (ECB) to take more aggressive measures.

Both the International Monetary Fund and officials from its member country France have recommended quantitative easing as a response to spur up inflation and growth in the region as well as to weaken its currency. The argument is not lost on the ECB as even executive board member Benoit Coeure has admitted that the strong euro has contributed greatly to the extremely low level of inflation in the monetary union and in adding pressure on the bank for more “monetary accommodation.”

Coeure, however, believes that the ECB’s announced measures in early June will be enough to make inflation pick up, eliminating any immediate need to initiate quantitative easing. He also warned that successful examples in the US and the UK may not be applicable to the eurozone since conditions such as being financed by banks instead of markets and the level of bond yields greatly differ.

Setting interest rates into the negative has so far not take its toll on the euro as shown in Monday’s exchange rate of $1.36 making analysts believe anything short of aggressive easing will prove to be ineffective. Germany, the bloc’s largest economy, is against this position saying that the euro’s current value is lending a hand to their framework for competitiveness and should not be manipulated in any direction.