Draghi: Be careful with the expensive euro

The head of the ECB, Mario Draghi, once again expressed his fears of the appreciation of the euro. Speaking on Monday, Draghi said the recent volatility in the euro exchange rate is a serious source of uncertainty and requires serious monitoring.
The euro rose from 1.05 at the beginning of the year, to about 1.19 dollars, at the moment. Further growth of the single currency against the dollar and other major currencies will seriously burden the "old continent".
Draghi told the European Parliament that the economic situation of the eurozone is stable and broad-based.
Further clarification on the ECB's future policy on incentives and record low interest rates is expected to be given at the next meeting of the Bank's Monetary Policy Committee on 26 October.
It is then that investors expect specific deadlines to end the program of incentives and the gradual normalization of interest rates in the euro area.
At the moment, the ECB buys back bonds worth 60 billion euros per month.
Speculation on ending incentives and normalizing interest rates was largely the basis for the appreciation of the single currency.
However, after the strong rise in the euro, the single currency seems to be in a correction mode, and it is now back below the threshold of 1.1900 on the first day of this week.
Draghi's comments helped further depreciation of the euro, which dropped to about $1.1850.

Draghi worried about the power of the euro?

The head of the ECB, Mario Draghi, is worried about the strength of the single currency against the dollar and other major currencies. Since the beginning of the year, the euro has risen by 12% against the dollar.
Thus, Draghi expressed same fears, repeatedly given by the previous ECB chief, Jean-Claude Trichet, that the strong euro could seriously hurt growth prospects for the eurozone economy.
In addition, the strong European currency puts a pole in the wheel of inflation. And inflation is one of the main threats to the growth of the eurozone economy.

Will the ECB keep zero interest rates for at least another year?

Europe struggles successfully for the leadership of growth and will gradually shift the US as the engine of the world economy in the second half of the year.
The difference will not be significant, but it shows the advantage of zero interest rates and the cheap euro. The slowdown in US growth does not just come from the process of normalizing of interest rates.
Their change is still insignificant, but the economy is entering the late stage of growth, which will be characterized by a slowdown in investment activity and industry. Consumption remains the most serious factor behind GDP growth, backed by low unemployment and low inflation.
Negative trends in industry and construction do not stop the Federal Reserve in raising interest rates because the slowdown in these sectors is not strong enough. Does this mean that raising interest rates is intended to stop the stock market turning into a bubble? More likely, because the deflationary processes have not passed and the economy does not overheat. In this case, the question arises when the US stock market will become aware of the risks of expensive stocks and of rising interest rates.
According to some analysts, the risks to growth in Europe are much less than the barriers to the US economy. Inflation worries remain in the background, with the European Central Bank holding zero interest rates for at least another year. Political risks are weakening, but tensions between Brussels and London will have economic consequences for both countries, which will gradually increase in 2018.