ECB Ready to Expand QE If Needed on Inflation Risks, Praet Says

26-Aug (Bloomberg) — The European Central Bank is ready to expand or extend its bond-buying program if needed as a slump in commodity prices and risks to global economic growth threaten its inflation goal, said Executive Board member Peter Praet.

“Recent developments in the world economy and in commodity markets have increased the downside risk of achieving the sustainable inflation path toward 2 percent,” Praet told reporters in Mannheim, Germany. “There should be no ambiguity on the willingness and ability of the Governing Council to act if needed.”

The euro weakened after the comments, which echo remarks by ECB Vice President Vitor Constancio on Tuesday and come just a week before the Governing Council will hold its next policy meeting. Inflation in the euro area was just 0.2 percent in July, and the slowdown in China’s economy, renewed slump in oil prices and stock-market turmoil could add downward pressure.

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PG View: These comments tanked the euro, buoying the dollar in the process. That in turn has weighed on gold.