Trump blasts comments by ECB's Draghi, cites unfair competition

Published: June 18, 2019
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Draghi states further monetary policy changes may be needed by ECB. PHOTO: REUTERS

Draghi states further monetary policy changes may be needed by ECB. PHOTO: REUTERS

WASHINGTON: US President Donald Trump criticised European Central Bank President Mario Draghi’s comments earlier on Tuesday that further monetary policy changes may be needed by the ECB, saying that would spark unfair European competition against the United States.

“Mario Draghi just announced more stimulus could come, which immediately dropped the euro against the dollar, making it unfairly easier for them to compete against the US. They have been getting away with this for years, along with China and others,” Trump said on Twitter.

Draghi said the ECB might need to cut interest rates or purchase assets if inflation in the euro zone continued to lag its target range.

“In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required,” Draghi told the ECB’s annual conference in Sintra, Portugal.

The comments sent the euro down by a quarter of a per cent against the US dollar while stocks erased early losses and bond yields fell further.

Trump has repeatedly criticised currency manipulation by other countries with which the US has large trade deficits, saying weaker currencies abroad give trading partners an unfair advantage and hurts American workers.

If a country’s currency is artificially low, its exports are more competitive. Higher US interest rates would generally increase the value of the dollar, making US exports more expensive.

Earlier in June, Trump criticised China, with which he is engaged in a trade spat, for devaluing its currency and said it created an uneven playing field for commerce.

He made similar criticisms of Russia and China in April, remarks that Treasury Secretary Steve Mnuchin said were “a warning shot at China and Russia about devaluation.”

Trump has been critical of the US Federal Reserve for its recent interest rate increases and has pressed the independent central bank to cut rates at a policy meeting this week. But Fed is expected to leave borrowing costs unchanged on Wednesday.

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