Frankfurt (Reuters) – Concerns about the appreciation of the euro are increasing at the European Central Bank.
“We are not aiming for an exchange rate. But it is clear that the exchange rates and especially the appreciation of the euro play an important role and exert downward pressure on prices,” said ECB chief Christine Lagarde on Thursday after the interest rate decision at the online press conference . “So we will follow this up, we will continue to monitor it very carefully in the future.” The euro had recently hit a two and a half year high and has appreciated by around twelve percent since mid-May.
A strong euro comes at an inopportune time for the ECB. As a result, products from the euro zone are becoming more expensive on the world markets in the midst of the Corona crisis and thus less competitive in terms of price. In addition, the appreciation of imported goods makes them cheaper, which also dampens inflation.
The ECB has missed its inflation target for years. It is aiming for an inflation rate of just under two percent, which it considers ideal for the economy. This year, however, it should only be 0.2 percent. The central bank economists expect that this target will also be clearly missed in the next three years.