FRANKFURT, Germany (AP) – The European Central Bank is edging closer to unleashing more monetary stimulus on top of the 1.1 trillion euros it is already pumping into the eurozone’s less than impressive economic recovery.
While no immediate action is expected at Thursday’s meeting in Malta, investors will look for hints from ECB President Mario Draghi that the bank is willing or preparing to extend the stimulus effort rather than let it end next year.
A big concern is preventing the euro from rising against other currencies from its current level around $1.13 per euro. A higher euro hurts exporters, who are key contributors to growth and jobs, and tends to weaken inflation by weighing on import prices.
A currency tends to weaken as a side effect of monetary stimulus, whose primary aim is to raise consumer price inflation. Currently, the eurozone’s inflation rate is alarmingly weak at an annual minus 0.1 percent. Europe’s economy grew 0.4 percent in the second quarter but unemployment remains high at 11 percent.
Draghi is getting no help on the exchange rate from his counterparts across the Atlantic at the U.S. Federal Reserve. The Fed has sent the dollar lower by postponing its first rate increase in seven years. It has held rates near zero as the economy recovers from the financial crisis and recession that followed the collapse of U.S. investment bank Lehman Brothers, way back in 2008.