ECB’s Praet: ECB forward guidance exploits complementarities of negative rates & QE

ECB chief economist Peter Praet crossed the wires last hour, via Reuters, speaking alongside ECB president Draghi at the ECB and its Watchers XVIII Conference held in Frankfurt.

Key Highlights:

Our monetary policy is working, the euro area economic recovery is steadily firming

ECB forward guidance exploits complementarities of negative rates & QE

The downward impact of purchases on long-term interest rates via compression of term premia will be offset by the upward pressure that will stem from the steeper path of the expected short term interest rates. 

The risks to the growth outlook remain tilted to the downside, even though their balance is improving.