22.10.202009:19 Forex Analysis & Reviews: Lagarde wants to strengthen the Euro

Yesterday, Christine Lagarde said via video link from Frankfurt that the third quarter was expected to be the most positive for the economic recovery, the ECB is ready to stimulate the economy if needed. Now the ECB has to pay a lot of attention in order to strengthen the euro, thus influencing inflation.

As of this moment, inflation in the euro area is the lowest in the last four years.

Lagarde also added that she could not agree that all incentive tools had already been exhausted. She said that "if necessary, we will continue to use those monetary policy instruments that are present now, by calibrating them to the required level, or by influencing other options for mechanisms for a quick response."

The announcement comes as economists expect the ECB to expand its emergency bond purchase program this year in the amount of 1.35 trillion euros or 1.58 trillion dollars, to breathe fresh air into inflation.

On Monday, the German Bundesbank announced its forecast that in the remaining months until the end of this year, the European economy will recover very slowly. Over these days, ECB members have emphasized that they are ready to support the eurozone, and Lagarde confirmed this in her latest comments.

Aside from answering questions about climate change, the transition to a digital euro, as well as debt cancellation, Lagarde added that all the stimulus measures taken by the Bank were able to stabilize markets, protect loans, thus supporting the economic recovery, which was calculated to regulate inflation just below 2%.

Raising inflation will take the ECB a long and difficult path.

In the second quarter, when compared with the previous year, the CPI (consumer price index) dropped 0.2%. The Central Bank is expecting that next year the rate will be 1% and in 2022 - 1.3%.

The ECB representatives noted that the euro exchange rate directly affects politics as well as inflation.