The euro fell to a day's low against the dollar and a 10-day low against sterling on Thursday, while European stocks hit a day's peak, after European Central Bank President Mario Draghi played down a recent rise in euro zone inflation. David Pollard reports on the latest ECB policy decision.
SOUNDBITE (English) MARIO DRAGHI, ECB PRESIDENT, SAYING: "Ladies and gentlemen, first of all let me wish you a Happy New Year ..." 2017 does look happier for the ECB. Euro zone business growth at its fastest in five years in December. Inflation above one per cent for the first time in three years. Though with German inflation running even hotter - Mario Draghi does also have an unhappy dilemma. (SOUNDBITE) (English) CMC MARKETS ANALYST, MICHAEL HEWSON, SAYING: "You've got inflation that's running at 1.7 per cent. So German savers - and Germany has a big savings culture - they're losing money in excess of two per cent in real terms on a year-on-year basis. That is creating an awful lot of problems for the German landesbanks, the savings banks, and the European financial system in general." But a massive QE programme left on hold at this meeting and rates too - at record low levels. The ECB chief staunch in the face of pressure from German leaders to wind down ultra-loose monetary stimulus. SOUNDBITE (English) MARIO DRAGHI, ECB PRESIDENT, SAYING: "German savers have benefitted not only as savers but also as borrowers, as entrepreneurs, as workers, like all the other citizens of the euro zone. So we have to be patient. As the recovery will firm up, real rates will go up." Not only that, he argued, but the uptick in inflation is mostly due to energy prices. The underlying trend still 'subdued'. While the global outlook keeps risks 'tilted to the downside'. SOUNDBITE (English) MARIO DRAGHI, ECB PRESIDENT, SAYING: "We stand ready to increase our asset purchase programme in terms of size and/or duration." Easing back or 'tapering' asset purchases was not even discussed by policymakers. The prospect of more easy money sending the euro to a day's low against the dollar - and pulling European shares out of the red.