European Central Bank President (ECB), Mario Draghi, confirmed on Friday the ECB will not hesitate to implement drastic measures to halt the Eurozone falling into a deflationary lost decade.
Whilst speaking in Frankfurt, Draghi, painted a bleak picture of the European economy and stressed the need for policy makers to stop deflationary forces taking hold. Draghi confirmed he saw no improvement in the economy and stressed the ECB would be prepared to inject money into the economy if current stimulus measures fail. Growth in the Eurozone fell to 0.2% in the third quarter according to the European Statistical Agency Eurostat.
Annual inflation across the 18 members Eurozone stands at 0.4%, well short of the ECB’s 2% target. Unsurprisingly Draghi’s comments were well received by the many bankers attending the conference.
Many now believe Draghi is close to announcing a full blown quantitative easing program with the ECB buying government debt. Following Draghi’s comments the 10 year Italian government bond yields fell to new all-time lows.
Precious metals historically outperform traditional assets during periods of excessive money printing.