Draghi's Comments Weigh On The Euro

The euro fell to a six week low on Thursday after the European Central Bank policy meeting resulted in an unchanged interest rate and revised economic growth forecasts for 2014. The common currency traded at $1.3130 on Friday morning. At a press conference following the meeting, the Wall Street Journal reported that ECB President Mario Draghi said the bank's members had discussed cutting the interest rate during the meeting, but in the end opted to keep it at its record low 0.5 percent. Draghi said the bank would consider cutting the rate in the future if money market rates increased further. He also pointed out that with inflation under control, the bank would be able to hold off on raising the interest rate for an extended period. His comments weighed on the euro as many saw the bank's accommodative stance as a lack of confidence in the strength of the eurozone recovery. With other central banks like the Federal Reserve preparing to tighten up fiscal policy, the ECB is signaling that the eurozone's recent improvement isn't strong enough to stand alone just yet. Also weighing on the euro was the bank's revised forecast for eurozone growth. The strong data coming out of the region gave the bank reason to increase its economic growth forecast for 2013, however its expectations for growth in 2014 were reduced to 1 percent instead of the 1.1 percent that was originally forecast. The takeaway from Draghi's press conference was that the bank was planning to keep interest rate low, or even take them lower for a long time in the future.