ECB’s Makhlouf: Uncertainty is weighing on investment

European Central Bank (ECB) Governing Council member and Central Bank of Ireland Governor Gabriel Makhlouf said on Tuesday that “uncertainty is weighing on investment; soft data pointing to a significant cooling in business and consumer sentiment.”

Additional quotes

• Global economic integration is now stalled, if not reversing; last few weeks have seen an acceleration in pace and scale of change.
• Even if a full-blown trade-war turns out to be short-lived, uncertainty effects will persist for some time.
• Monetary policy must adapt to the new nature of supply shocks generated by geoeconomic fragmentation.
• Given effects of size, scale and more persistent nature of fragmentation-induced shocks, and their impact on prices, monetary policy responses will need careful calibration.
• Threats of inflation de-anchoring, from both above and below, warrant forceful and persistent responses.
• Interest rate remains default policy lever in our toolbox; when constrained by lower bound, other tools such as targeted lending and balance sheet operations have their uses.

Market reaction

EUR/USD holds the rebound to near 1.1115 following these comments, up 0.22% on the day at press time.