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Draghi toughens tone on bank regulation, inflation

Friday, November 18, 2016 - 01:53

Amid speculation the new US administration could ease bank rules, Mario Draghi insists global banking regulation should not be rolled back. The ECB chief also spoke in Frankfurt on the need for a 'sustainable' rise in inflation, in remarks seen by some as hinting at an extension of the Bank's QE programme. David Pollard reports.

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John Cryan, Martin Zielke and Mario Draghi chat in Frankfurt. At the same conference: the chiefs of Deutsche Bank and Commerzbank - and the man charged with regulating them. (SOUNDBITE) (English) ECB PRESIDENT, MARIO DRAGHI, SAYING: "So now it is the time to finalize the regulatory agenda .... there should be no rolling back on what's been decided." The concern on this occasion - not Europe's banks. But uncertainty after the US election - and a new president-elect who's hinted he could scrap bank sector rules. Analysts split in their thinking on the dangers .... (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "Any rolling back on that regulation could be seen as a retrograde step ... but on the other side of the equation, the regulatory changes have also impacted liquidity - and in a sense, that's amplified volatility." And for Draghi the other big focus is inflation. At just half a per cent, still a long way from the ECB target rate. (SOUNDBITE) (English) ECB PRESIDENT, MARIO DRAGHI, SAYING: "Our assessment will depend on whether we see a sustained adjustment in the path of inflation ... even with a reduction in monetary accommodation." A hint for some the Bank will extend its QE programme beyond March. Four out of five economists seeing that as its most likely option in a new Reuters poll. As markets brace for elections across Europe. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "In a post-truth world, and that's of course that's the Oxford Economic Dictionary's word of the year which encapsulates the reasons why we've seen both Brexit and/or the Trump vote ... certainly those political uncertainties could create damage for the euro zone's project through 2017." Draghi also expected to plea for more fiscal spending at the next ECB meeting. Though Germany has now rejected a European Commission call to relax budgets. Monetary stimulus not just the most likely but possibly the only option left.

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Draghi toughens tone on bank regulation, inflation

Friday, November 18, 2016 - 01:53