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Draghi to attend Fed's Jackson Hole just before key ECB decision

Friday, July 14, 2017 - 00:00

[FRANKFURT] Mario Draghi will attend this year's US Federal Reserve symposium in Jackson Hole, opening the possibility that he could send a message on the European Central Bank's bond-buying program as the euro area becomes less reliant on stimulus.

The ECB president is scheduled to attend the Kansas Fed event in Wyoming, an ECB spokesman said. The annual gathering will take place August 24-26, less than two weeks before Mr Draghi convenes a meeting of the decision-making Governing Council in Frankfurt.

The appearance in Jackson Hole will be charged with symbolism as the ECB's three-year campaign against the risk of euro-area deflation draws to an end. When Mr Draghi last spoke there, in 2014, he added a line to his prepared remarks saying inflation expectations had fallen "at all horizons".

The comment was made without consultation with the Governing Council and heralded the large-scale asset purchases that would start six months later.

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The bond-buying program is set to total 2.3 trillion euros (S$3.631 trillion) by the end of this year, and has been bolstered by negative interest rates and free loans to banks.

While euro-area inflation is still short of the goal of just under two per cent, Mr Draghi used a speech at the ECB Forum last month in Sintra, Portugal, to say that "the threat of deflation is gone and reflationary forces are at play". That sent the euro and bond yields surging on speculation that the central bank is almost ready to pare back stimulus.

The Governing Council will next set policy on July 20, but most economists expect any major announcement on stimulus to come no sooner than the Sept 7 session. Officials haven't yet formally discussed winding down QE, which is scheduled to run until at least the end of the year, and haven't shown much urgency to do so before the fall.

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